MIRA
INFORM REPORT
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Report Date : |
17.03.2007 |
IDENTIFICATION
DETAILS
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Name : |
RELIANCE
PETROLEUM LIMITED |
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Country : |
India |
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Registered Office : |
Motikhavdi, P.O. Digvijaygram, District Jamnagar 361140,
Gujarat, India |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
24.10.2005 |
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Com. Reg. No.: |
04-48030 |
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CIN No.: [Company
Identification No.] |
U11100GJ2005PLC048030/U99999MH2005PTC156971 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
RKTR01044B |
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PAN No.: [Permanent
Account No.] |
AAACR5691P |
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Legal Form : |
A Public Limited
Liability Company. The company’s shares are listed on the stock exchanges. |
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Line of Business : |
Company is setting
up a Refinery Project |
RATING &
COMMENTS
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MIRA’s Rating : |
B |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average/normal. |
Small |
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Maximum Credit Limit : |
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Status : |
New Project |
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Payment Behaviour : |
Slow but Correct |
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Litigation : |
Clear |
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Comments : |
Subject is a new
company of Reliance Group, one of the largest industrial houses in India,
chaired by Mr. Mukesh Ambani. The company came out with its maiden public issue
recently, which was a great success. The refinery project is under
implementation and is expected to commence commercial activities in December
2008. Payments are reported as slow but correct. The company can
be considered for business dealings at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
Motikhavdi, P.O. Digvijaygram, District Jamnagar 361140,
Gujarat, India |
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Tel. No.: |
91-288-3011 805 |
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Fax No.: |
91-288-3011850 |
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E-Mail : |
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Website : |
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Corporate Office : |
3rd Floor, Maker Chambers IV, 222 Nariman Point, Mumbai 400
021, |
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Tel. No.: |
91-22-2278 5214 / 2278 5568 / 2278 5585 /
2278 5589 / 2278 5000 / 2278 5185 / 2278 5560 |
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Fax No.: |
91-22-2278 5111 |
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E-Mail : |
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Website : |
DIRECTORS
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Name : |
Mr. Mukesh
D. Ambani |
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Designation : |
Non-Executive
Chairman |
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Address : |
Sea Wind,
39, Cuffe Parade, Colaba Mumbai 400 005 |
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Date of Birth/Age : |
48 Years |
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Other
Directorships |
Reliance
Industries Limited Chairman
Reliance Europe Limited Indian
Petrochemicals Corporation Limited Reliance
Retail Limited Pratham
India Education Initiative |
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Name : |
Mr. Hital R.
Meswani |
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Designation : |
Director |
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Address : |
Woodlands,
Flat No C – 23/24 67 Pedder Road, Mumbai 400 026 |
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Date of Birth/Age : |
37 Years |
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Other
Directorships |
Reliance
Industries Limited Reliance
Industrial Investments & Holdings Limited |
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Name : |
Mr. Manoj
Modi |
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Designation : |
Director |
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Address : |
Flat No.
7, BEST Apartments,Walkeshwar, Mumbai 400 006 |
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Date of Birth/Age : |
48 Years |
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Other
Directorships |
Reliance
Retail Limited Tally
Solutions Private Limited |
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Name : |
Mr. P. M.
S. Prasad |
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Designation : |
Director |
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Address : |
92/93,
Bakhtawar Co-operative Society Limited, 22, Narayan Dabholkar Road, Mumbai 400
006 |
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Date of Birth/Age : |
54 Years |
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Other
Directorships |
Jamnagar Ratlam
Pipeline Company Limited Jamnagar
Kandla Pipeline Company Limited Reliance
Gas Pipelines Limited Reliance
Infrastructure Limited Delphinus
Commercials Private Limited |
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Name : |
Mr.
Yogendra P. Trivedi |
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Designation : |
Director |
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Address : |
“Mistry
Manor”, 62-A Napean Sea Road Mumbai 400 006 |
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Date of Birth/Age : |
77 Years |
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Other
Directorships |
Reliance
Industries Limited Safari
Industries (India) Limited Colosseum
Sports & Recreation International The Supreme
Industries Limited Birla
Power Solutions Limited Sai
Service Station Limited The Zandu
Pharmaceutical Works Limited Zodiac
Clothing Company Limited Ushdev
International Limited Clare Mont
Trading Private Limited Telstar
Travels Private Limited Trivedi
Consultants Private Limited Monica
Travels Private Limited Bloomingdale
Estates Private Limited Metro
Exporters Private Limited |
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Name : |
Mr. Mahesh
P. Modi |
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Designation
: |
Director |
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Address
: |
B-92
Sector 27Noida 201 301 (U.P.) |
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Date of
Birth/Age : |
66 Years |
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Other
Directorships |
Reliance
Industries Limited Mangalore
Refinery and Petrochemicals Limited ICICI
Prudential Life Insurance Company Limited |
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Name : |
Mr. Atul
S. Dayal |
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Designation
: |
Director |
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Address
: |
21,
Valentina, Naoroji Gamadia Road, Mumbai 400 026 |
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Date of
Birth/Age : |
57 Years |
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Other
Directorships |
Reliance
Power Ventures Limited Pudumjee
Agro Industries Limited Gammon
India Limited Actavis
Pharma Limited Goa Publications Private Limited SMS
Biopharma Private Limited Harbingers
Developers Private Limited Novation
Developers Private Limited Millennium
Developers Private Limited Arcadia
Estates and Developments Private Limited Spectrum Informative
Services Private Limited Pavna Agro
Farms Private Limited |
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Name : |
Mr. Bobby
Parikh |
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Designation
: |
Director |
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Address
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7th Floor,
The Jackers, 113 Carter Road,Bandra West, Mumbai 400 050 |
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Date of
Birth/Age : |
41 Years |
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Other
Directorships |
HDFC Bank
Limited Erix
Advisors Private Limited |
KEY EXECUTIVES
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Name : |
Mr. K
Sethuraman |
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Designation
: |
Company
Secretary and Compliance Officer |
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Address
: |
3rd Floor,
Maker Chambers IV,222 Nariman Point, Mumbai 400 021, India. |
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Date of
Birth/Age : |
91 22 2278
5214 |
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Qualification
: |
91 22 2278
5111 |
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Experience
: |
MAJOR SHAREHOLDERS
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Reliance
Industries Limited |
2,700,000,000 |
85.71 |
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Fidelity Shares & Securities Private
Limited |
75,000,000 |
2.38 |
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Life Insurance Corporation of India |
67,500,000 |
2.14 |
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State Bank of India |
50,000,000 |
1.59 |
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Goldman Sachs Investments (Mauritius) I
Limited |
47,000,000 |
1.49 |
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Industrial Development Bank of India
Limited |
33,500,000 |
1.06 |
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Global Investment House KSC (Closed) ,
Kuwait |
22,000,000 |
0.70 |
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Punjab National Bank |
21,500,000 |
0.68 |
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Bank of Baroda |
20,000,000 |
0.63 |
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Canara Bank |
20,000,000 |
0.63 |
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Deutsche Securities Mauritius Limited |
15,000,000 |
0.48 |
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Citigroup Global Markets Mauritius Private
Limited |
15,000,000 |
0.48 |
BUSINESS DETAILS
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Line of Business : |
Company is
setting up a in Refinery Project |
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Products : |
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GENERAL INFORMATION
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Bankers : |
State Bank
of India Corporate
Accounts Group Branch, Voltas House, 23, J N Heredia Marg, Ballard Estate,
Mumbai 400001 Tel: 91-22-2267 1916 Fax:
91-22-2267 9030 HDFC Bank
Limited Manekji Wadia
Building, Nanik Motwane Marg, Fort, Mumbai 400023 Tel:
91-22-2270 3390 Fax:
91-22-2270 3392 IDBI Bank
Limited 224 A
Mittal Court, A Wing, Nariman Point, Mumbai 400021 Tel:
91-22-2202 4831 Fax:
91-22-2282 4071 ICICI Bank
Limited 215, Free Press
House, Nariman Point, Mumbai 400021 Tel:
91-22-2284 2947 Fax:
91-22-2285 3591 |
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Facilities : |
-- |
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Banking
Relations : |
Satisfactory |
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Auditors : |
Chaturvedi & Shah Chartered
Accountants (member
of Nexia International) A-3,
Laxmi Towers, first floor, Bandra Kurla Complex, Bandra (East), Mumbai 400
051, India. Tel: 91-22-3061 6100 Fax:
91-22-3061 6125 Deloitte Haskins & Sells Chartered
Accountant, 12,
Dr. Annie Besant Road, Opposite Shiv Sagar Estate, Worli, Mumbai 400018,
India Tel: 91-22-5667 9000 Fax: 91-22-5667 9100 |
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Associates/Subsidiaries : |
Ř
Reliance
Industries Limited Ř
Reliance
Utilities and Power Limited Ř
Reliance Ports
and Terminals Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
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10,000,000,000 |
Equity Shares |
Rs. 10/- Each |
Rs. 100000.000 Millions |
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5,000,000,000 |
Preferences
Shares |
Rs. 10/- Each |
Rs. 50000.000 Millions |
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Total |
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Rs. 150000
Millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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2700,000,0000 |
Equity Shares |
Rs. 10/- Each |
Rs. 27000.000 Millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
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31.03.2006 |
28.02.2006 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
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27000.000 |
27000.000 |
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2] Share Application Money |
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4500.000 |
0.000 |
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3] Reserves & Surplus |
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0.000 |
0.000 |
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4] Miscellaneous Expenditure |
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0.000 |
0.000 |
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NETWORTH |
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31500.000 |
27000.000 |
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LOAN FUNDS |
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1] Secured Loans |
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0.000 |
0.000 |
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2] Unsecured Loans |
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0.000 |
0.000 |
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TOTAL BORROWING |
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0.000 |
0.000 |
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DEFERRED TAX LIABILITIES |
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0.000 |
0.000 |
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TOTAL |
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31500.000 |
27000.000 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
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19036.138 |
11119.210 |
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Capital work-in-progress |
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7985.263 |
15905.460 |
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INVESTMENT |
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0.000 |
0.000 |
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DEFERREX TAX ASSETS |
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0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
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0.000 |
0.000 |
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Sundry Debtors |
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0.000 |
0.000 |
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Cash & Bank Balances |
|
4509.617 |
0.960 |
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Other Current Assets |
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0.000 |
0.000 |
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Loans & Advances |
|
2.212 |
0.000 |
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Total Current Assets |
|
4511.829 |
0.960 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
|
55.350 |
49.730 |
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Provisions |
|
3.519 |
0.300 |
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Total Current Liabilities |
|
58.869 |
50.030 |
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Net Current Assets |
|
4452.960 |
(49.070) |
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MISCELLANEOUS EXPENSES |
|
25.639 |
24.400 |
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TOTAL |
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31500.000 |
27000.000 |
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KEY RATIOS
|
PARTICULARS |
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31.03.2006 |
28.02.2006 |
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Debt Equity Ratio (Total Liability/Networth) |
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|
0.00 |
0.00 |
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Current Ratio (Current Asset/Current Liability) |
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|
76.64 |
0.02 |
LOCAL AGENCY
FURTHER INFORMATION
Reliance
Infrastructure Limited (“RFL”), a subsidiary of RIL, intends to lease about
1,700 acres of land to us for the Project. To date, it has acquired about 1,100
acres of land and needs to acquire an additional 600 acres of land in order
that they may implement the Project. Any delay in acquiring such land by RFL or
subsequently leasing it to us will have a material adverse effect on the
Project. There can be no assurance that RFL will acquire the necessary land and
lease it to us, or that it will do so in a timely manner. The timely completion
of the Project involves managerial and logistical challenges for RIL, RIL’s
Affiliates and us. Any significant delay in completing the Project as planned
or on schedule may result in RPL commencing operations in an increased
competitive environment for premium products. This may be due to the addition
of new refining capacity by competitors as well as upgradation of existing
refineries. Such a scenario may have a material adverse effect on their
business, results of operations and financial condition.
Promoter of the
Company
The Company was
initially promoted by Reliance Industries Limited (“RIL”) as its wholly owned
subsidiary. RIL, Chevron India Holdings Pte. Limited, Singapore (“Chevron”) and
the Company on April 12, 2006 signed an agreement for purchase by Chevron 5 per
cent equity share capital of the Company from RIL. Chevron has agreed to be and
has been named as one of the Promoters of the Company along with RIL in the
Prospectus issued for the Initial Public Offering (IPO) of the Company.
Operations –
Implementation of the Project
The Company has
been formed to set up a greenfield petroleum refinery and polypropylene plant
(the “Project”) to be located in a Special Economic Zone (the “SEZ”) in
Jamnagar in the State of Gujarat, Western India. The proposed refinery and
polypropylene plant will be located adjacent to the existing refinery and
petrochemical
complexes of RIL.
The refinery will
have a complexity of 14.0, as measured using Nelson Complexity Index. The refinery
will have a total atmospheric distillation capacity of approximately 580 kilo
barrels of crude oil per stream day and also a 0.9 million tonnes per annum
polypropylene plant. The refinery when constructed will be the sixth largest in
the world based on current capacities.
The Company
intends to complete construction and commission the refiner and the
polypropylene plant in, or around, December 2008. Agreements have been entered
into with Bechtel France S.A.S (“Bechtel”) to license the technology for the
major process units of the refinery and polypropylene plant. Bechtel will also
provide engineering, project management and other construction services for the
Project.
The Company has
already received environmental clearance from the Ministry of Environment and
Forest and from the Pollution Control Board, Gujarat for setting up the
project. The SEZ being developed by Reliance Infrastructure Limited, a
subsidiary of RIL, has already been notified by the Government and the
Company’s application for setting up the project as a unit in the SEZ is
pending for approval.
The Project cost
is estimated at Rs.270000 Millions and is proposed to be financed by equity of
Rs.112500 Millions and debt of Rs.157500 Millions. The debt is expected to be
raised by foreign currency syndicated loan, foreign currency term loans from
Export Credit Agencies and rupee debt / bonds.
Shifting of
Registered Office of the Company
The Registered
Office of the Company has been shifted from the State of Maharashtra to the State
of Gujarat with effect from March 29, 2006.
Initial Public
Offer of Equity Shares of the Company
The Company
entered the capital market with an IPO of 1350 Millions equity shares of Rs.10
each for cash at a price band of Rs.57 - 62 per share through a 100 % book
building process. Of this, 900 Millions equity shares were reserved as
promoter’s contribution and the net offer to the public was 450 Millions equity
shares of Rs.10 each.
The issue was open
for subscription / bids between April 13, 2006 and April 20, 2006.
The IPO has
received an overwhelming response with an oversubscription of about 52 times.
The Company in consultation with Book Running Lead Managers (BRLMs) has
finalised the issue price at Rs.60 per equity share.
The book building
was conducted using the facilities provided by Bombay Stock Exchange Limited
and The National Stock Exchange of India Limited.
The proceeds from
the IPO will be used to partly finance the Company’s Project.
Intend to commence commercial operations of
the refinery and polypropylene plant in, or around, December 2008
Upon completion of the Issue, RIL will
continue to hold 80% in their share capital. Since RIL will have multiple roles
with respect to us, as a service provider and a majority shareholder, they may
be limited in their ability to negotiate with RIL and its Affiliates and the
agreements that they enter into with RIL and its Affiliates may not be on the
most favourable terms forus. As RIL also operates a refinery and petrochemicals
complex which is larger than their proposed refinery and polypropylene
plant, RIL may compete directly with us in
the future. In addition, as noted above, in the event they have a conflict of
interest with RIL, the resolution of such a conflict may not be on the most
favourable terms to us.
Conflicts of interest may arise between us
and RIL in a number of areas including:
Direct or indirect competition with respect
to the purchase, allocation and transportation of crude oil and other
feedstocks;
_ Direct or indirect competition with respect
to the marketing and sales of refined products and polypropylene;
_ deputing managers and other employees as
needed by us;
_ Business combinations involving their
company; and
_ Business opportunities that may be attractive
to both RIL and us.
They expect to lease the land required for
the Project along with related infrastructure such as roads, storm water
drains, etc. under a long term lease from Reliance Infrastructure Limited
(RFL), which is the developer of the SEZ in Jamnagar. For providing these
facilities, they are expected to place a deposit of Rs. 2,990 million to RFL.
They are also expected to place deposits of Rs. 1,500 million each to RUPL and
RPTL, respectively, for the use of power and utilities and ports and terminal
services to be established by them. These deposits are as estimated by us and
the actual deposits may vary.
The dangers inherent in their proposed operations could cause disruptions and could expose us to significant losses, costs or liabilities. They are particularly vulnerable to disruptions in their operations because all of their refining operations will be conducted at a single location.
Their proposed refinery and polypropylene
operations are subject to significant hazards and risks inherent in refining
and petrochemicals operations and in transporting and storing crude oil,
intermediate products and refined products. These hazards and risks include:
Natural disasters;
_ Fires;
_ Explosions;
_ ruptures and spills from crude and product
carriers or storage tanks;
_ third-party interference;
_ Disruption of deliveries of crude oil or
refined products;
_ Disruptions of electricity, water and other
utility services; war or terrorism;
_ Communal unrest; and
_ Mechanical failures of equipment at their
refinery and polypropylene plant or third-party facilities nearby.
Their refinery and polypropylene plant
consists of many processing units. One or more of the units may require
unscheduled downtime for unanticipated maintenance or repairs, or their planned
turnarounds may last longer than anticipated. Normally, the refinery and
polypropylene plant shuts down for maintenance approximately once in every
three to four years for about 45 to 60 days. Such scheduled and unscheduled
maintenance closures could reduce their revenues and increase their costs
during the period that their units are not operating.
They do not intend to begin test operations
until, or around, December 2008. As a new facility, operations of the refinery
and polypropylene plant will be subject to various uncertainties relating to
the ability to process crude oil and other feedstocks, and produce refined
petroleum products and polypropylene as planned, including the potential
failure of any key equipment. RIL has operated a refinery and petrochemicals
complex located at Jamnagar in Gujarat since 2000 and will assist us in
starting-up their refinery and polypropylene plant. However, they cannot assure
you that their new refinery and polypropylene plant will reach full capacity or
achieve results comparable to those of RIL’s existing refinery and
petrochemicals complex.
In addition, their refinery and
polypropylene plant is proposed to be located in a Special Economic Zone (an
“SEZ”), to be developed by RFL. The Special Economic Zone Act, 2005 (the “SEZ
Act”), which prescribes the regulations to establish and operate within an SEZ,
has conferred significant tax and other fiscal benefits to units and companies
that operate such units in an SEZ, as outlined under “Regulations and Policies”
on page 71. RFL has received approval to develop the SEZ, but the SEZ is yet to
be notified by the central government. After such notification is made, they
have to apply and receive approval for setting up the Project as a Unit in the
SEZ. The Project will be eligible for the concessions and benefits only after
receipt of such approvals. However, they cannot guarantee that they will
receive such benefits or continue to receive them. Their receipt of such
benefits is subject to the condition that they achieve positive net foreign
exchange earnings at the end of five years from the date of commencement of
commercial operations of the refinery and polypropylene plant and at the end of
every subsequent five year period. Positive net foreign exchange earnings are
achieved if their foreign earnings are greater than their foreign spending and
they cannot assure you that they will achieve positive net foreign exchange
earnings. The loss of the concessions and benefits provided to us under the SEZ
Act would have a material adverse effect on their business, results of
operations and financial condition. The SEZ Rules, 2006, provide that if the
Approval Committee of the SEZ determines that the SEZ Unit has not achieved
positive net foreign exchange earnings, then the SEZ Unit will be liable for
penal actions under the provisions of the
Foreign Trade (Development and Regulation)
Act, 1992.
RIL and its Affiliates are involved in legal
proceedings that have been initiated against them.
There were approximately 1,260 cases filed
against RIL and its Group Companies as on December 31, 2005. Out of the above
cases, 294 cases are those in which damages and compensation is sought for
delay in transfer of shares/debentures, 381 cases are those involving disputes
with respect to transfer or demat of shares and 35 cases involve
appeals/revisions preferred by the Company. The balance 475 cases include
criminal cases, civil cases, labour cases, income tax, sales tax, customs,
excise, and consumer cases. The value, where quantifiable, involved in cases of
Rs. 500 million or above in the case of RIL and Rs. 50 million or above in the
case of IPCL and RIIL, totals approximately Rs. 36,160.48 million as on date.
Global Oil Markets
Oil is one of the world’s most significant
sources of commercial energy. It met 37% of the global energy needs of 10,224
million tonnes of oil equivalent (“MTOE”) in 2004 while its nearest rivals,
coal and natural gas, met 27% and 24% respectively, as shown in the chart below.
According to the BP Statistical Review of
World Energy, June 2005, the Middle East dominates proven reserves of oil, with
about two-thirds of the estimated 1,189 billion barrels of the world’s proven
reserves. Saudi Arabia (263 billion barrels), Iran (133 billion barrels) and
Iraq (115 billion barrels) are the three largest holders of proven oil reserves
in the world. The three largest producers of oil, including natural gas
condensates, in the world are: Saudi Arabia (10.6 million barrels per day), Russia
(9.3 million barrels per day) and the United States (7.2 million barrels per
day).
Global Oil Refining Industry Introduction
The oil refining industry is a global
business because crude oils, other feedstocks and refined petroleum products
can be transported at a relatively low cost by sea and by pipeline and there is
worldwide demand for such products. The principal factors affecting refining
margins are the demand for and prices of refined petroleum products relative to
the supply and cost of crude oils and other feedstocks and the configuration,
capacity and utilisation rates of refineries. The range and quality of refined
petroleum products produced by any given refinery depends on the types of crude
oil used as feedstock and the configuration of the refinery. Light and sweet
crude oils are more expensive and generate greater yields of higher value
refined petroleum products, such as gasoline, aviation fuels and diesel.
Heavier and sourer crude oils are less expensive and generate greater yields of
lower value petroleum products, such as fuel oils. The configuration of certain
refineries, particularly in North America, is typically oriented towards the
production of gasoline whereas the configuration of refineries in most of the
other regions is typically oriented towards the production of middle
distillates, such as diesel and aviation fuels. In addition, there are
refineries which are configured towards certain other specialty products, such
as base oils, naphthenics and bitumen. Oil refineries can generally be divided
into two principal categories:
Simple hydroskimming refineries and complex
refineries. Simple hydroskimming refineries primarily carry out the
distillation process while complex refineries carry out two additional
functions, conversion of hydrocarbon fractions produced in the crude
distillation process to other products and the treatment of intermediate
products to create higher value-added products. Consequently, simple refineries
produce lower value petroleum products than complex refineries for any given
mix of crude oil feedstocks.
Crude Oil Qualities
Crude oil quality is measured in terms of
density (light to heavy) and sulphur content (sweet to sour). Density is
classified by the American Petroleum Institute (‘‘API’’). API gravity is
defined based on density at a temperature of 15.6 degrees centigrade. The
higher the API gravity is, the lighter is the crude oil. Light crude oils are
generally those with an API gravity of 33 degrees and above, while heavy crude
oils have an API gravity of 29 degrees or less. The crude oils with API gravity
between 29 and 33 degrees are generally referred to as medium crude oils. With
respect to sulphur content, sweet crude oil is commonly defined as crude oil
with sulphur content of less than 0.5 percent while sour crude oil has sulphur
content of greater than 0.5 percent.
The quality of crude oil and other
feedstocks dictates the level of processing and conversion necessary to achieve
an optimal mix of finished products. Light sweet crude oils are more expensive
than heavier and sourer crude oils because they require less treatment and
produce a slate of products with greater percentage of value-added, light
refined petroleum products such as gasoline, aviation fuels and diesel. The
heavier and sourer crude oils typically sell at adiscount to the lighter and
sweeter crude oils because they produce a greater percentage of lower
value-added products with simple distillation and require additional processing
to produce the higher value, light products. Consequently, refiners strive to
process the optimal mix, or slate, of crude oils through their refineries,
depending on each refinery’s conversion and treating capacity, the desired
product output and the relative prices of available crude oils.
Crude oil pricing is a function of many
variables. As outlined above, the most important variables are the API gravity
and the sulphur content in the grade. All grades of crude oil are sold at a
differential to what are known as marker grades. For each geographical region,
there are established marker grades, e.g. Brent for the North Sea and West
African markets, WTI for North American markets and Oman and Dubai for East of
Suez markets. These differentials vary from time to time depending on a variety
of factors like relative production levels of light/sweet and heavy/sour crude
oils, product specifications and price margin spreads between different
products. For example, when price spreads between higher value distillates and
lower value fuel oil are high, the lighter and sweeter crude oils trade at a
larger differential to heavier and sourer crude oils.
Overview of Refining Processes
Crude oil is refined into a wide variety of
intermediate and final products. In general, the process units in a refinery
perform three different functions:
_ separate by distillation the many types of
hydrocarbons present in crude oil and other feedstocks;
_ chemically convert some of the lower valued
fractions into more desirable products; and
_ treat intermediate products by removing
unwanted elements and compounds for blending into final end products.
Each step in the refining process is
designed to maximise the value added to its inputs. Most simple refineries
carry out only the first function, crude distillation, while more complex
refineries also perform the other two functions, conversion of hydrocarbon
fractions to other products and treatment of intermediate products. The
following description outlines the refining process of a typical complex
refinery.
Distillation. The first refinery unit to process raw crude
oil is the atmospheric distillation unit. Crude oil is separated by boiling in
the distillation units under high heat and recovered as hydrocarbon fractions.
The lowest boiling fractions, including LPG and naphtha, vaporise and exit the
top of the atmospheric distillation unit. Medium boiling liquids, including
kerosene, which is used for aviation fuels, and distillates such as diesel oil
and heating oil, are drawn from the middle of the distillation unit. Higher
boiling liquids, called atmospheric distillation residues, are drawn together
from the bottom of the atmospheric distillation unit and further separated into
vacuum gasoil under low pressure in the vacuum distillation unit. Vacuum
residues can be upgraded to light and middle distillates or used for fuel oil
and bitumen production. The various fractions are then pumped to the next
appropriate unit in the refinery for further processing into higher value-added
products.
Refining Industry Characteristics
Economics of oil refining
Oil refining is primarily a margin-based
business in which a refiner’s goal is to optimise the refining processes and
yields of all products in relation to feedstocks used. In a simple refinery, a
greater percentage of the end products are less valuable heavy products such as
fuel oil, long residue and bitumen. Complex refineries generally produce a
lower percentage of these heavy products and produce a higher percentage of light
products such as LPG, naphtha and gasoline and middle distillates such as
kerosene and diesel. The total value of the finished products less the cost of
crude oil and other feedstock is commonly referred to as the gross refining
margins (“GRMs”). The GRMs of complex refineries are higher than those of
simple refineries because complex refineries are able to generate a higher
yield of light and middle distillates from lower cost heavier and sourer crude
oils. In addition, a lower proportion of lower value heavy products are
produced in a complex refinery because they have secondary
processing facilities available to convert
these products into the higher value light products.
Crude oil typically accounts for 90% to 95%
of the total cost of refining. Because other operating expenses are relatively
fixed, the goal of refineries is to maximise utilisation rates, maximise the
yields of higher value-added products, minimize feedstock costs and minimise
operating expenses.
Location of oil refineries
The location of an oil refinery can have an
important impact on its refining margin since the location influences its
ability to access feedstocks and distribute its products efficiently. The
location dictates what proportion of the feedstocks and products can be transported
by tanker vessels by sea or via pipelines, rail or tank trucks. Refining
companies seek to maximise their profits by placing their products in the
markets where they receive the highest returns after taking into account
delivery transportation costs and other expenses such as import duties in those
markets. Due to their flexibility and lower logistics costs, coastal refineries
typically have a competitive advantage over the oil refineries located inland.
In some cases, oil refiners situated in areas of high petroleum product
consumption enjoy a comparative advantage with respect to satisfying the local
demand.
Crude Oil Supply
As shown in the table below, in 2004, the
global oil supply was estimated by the International Energy Agency (“IEA”) to be
82.1 million barrels per day. The Middle Eastern OPEC countries accounted for
27.8% and total OPEC countries accounted for 39.5% of this supply. IEA
estimates that by 2020, global oil supply may reach 104.9 million barrels per
day with Middle Eastern OPEC countries accounting for 33.7% and total OPEC
countries accounting for 45.2%.
The Refinery Project
Global size, complex refinery
We are proposing to construct and operate a
refinery that will have an atmospheric distillation capacity of approximately 580
KBPSD with an expected complexity of 14.0 as measured using the Nelson
Complexity Index. The Project would also comprise of a 0.9 MMTPA polypropylene
plant.
Their proposed refinery would be the sixth
largest in the world based on the current global ranking of refineries by the
industry publication, Oil and Gas Journal, December 2005. The proposed
facility is designed to be a highly complex refinery with significant secondary
processing facilities designed to maximise the quantity of value added products
such as propylene, alkylates, jet fuel and diesel.
Refining process
The following chart sets out the refining
process of crude oil and other feedstocks into refined petroleum products that will
be followed at their proposed refinery. For further information on the refining
process, see “Industry Overview — Overview of Refining Processes and Products”.
The salient features of their proposed
refinery’s process configuration are highlighted below.
There are two trains each of crude
distillation units (“CDU”) and vacuum distillation units (“VDU”). Virtually any
grade of crude can be processed in the CDUs and VDUs where crude oil is
separated into its components, namely gas, C3/C4 (saturated liquefied petroleum
gas (“LPG”)), naphtha, light kerosene (“LK”), heavy kerosene (“HK”),
atmospheric gas oil (“AGO”), vacuum gas oil (“VGO”) and vacuum residue (“VR”).
The crude and vacuum distillation units are integrated for energy efficiency.
The C3/C4 mix goes to the alkylation unit. The unconverted C3 is sold as
propane. The naphtha is split into light and heavy naphtha. The heavy naphtha
is hydrotreated in the heavy naphtha hydrotreater unit (“HNHT”) from where it
goes to the continuous catalytic regeneration platformer. The platformer
converts naphtha into reformate, a high-octane gasoline component. The majority
of light naphtha is upgraded into gasoline. Light kerosene undergoes jet
blending with 0.2% sulphur. Heavy kerosene and gas oil is desulphurised in two
trains of diesel hydro desulphurisation units (“DHDS”) to produce 10
parts per million (“ppm”) sulphur diesel.
Vacuum gas oil is hydrotreated in two trains of VGO hydro treating units
(“VGOHT”) to improve the quality of feedstock for FCC. Hydro treated VGO is fed
to a high-severity FCC. Hydrogen, required for hydro-treatment of various
streams, is produced in hydrogen manufacturing units (“HMU”).
VR is thermally cracked in a delayed coker
unit (“Coker”). The coker products such as light coker gas oil (“LCGO”) and
heavy coker gas oil (“HCGO”) are further treated in DHDS and VGOHT units
respectively. Coke is the final product from the coker. The coker allows
minimising fuel oil production. The fluid catalytic cracking unit (“FCC”) is
the principal refinery unit to maximise gasoline and propylene. The FCC cracks
hydro treated VGO from VGOHT to produce components like gas, C3/C4 (unsaturated
LPG), gasoline, light cycle oil (“LCO”) and clarified slurry oil (“CSO”). C3/C4
from the FCC goes to the propylene recovery unit (“PRU”). Recovered propylene
is converted into polypropylene (“PP”). The C4 stream from the PRU is the
primary feed to the alkylation unit. The alkylation unit converts C4 into
alkylate, a premium gasoline component. Alkylate is either sold as a product or
used to upgrade naphtha into gasoline. The butamer unit isomerises C4 to
supplement the feed to the alkylation unit. The gasoline from the FCC is hydro
treated in the scanfiner unit to produce 10 ppm sulphur gasoline. LCO from the
FCC is unsuitable for blending into premium diesel. So, it is cracked in the
LCO hydrocracker unit (“LCOHC”) to convert it into a diesel blend stock. A post
treating unit (“PTU”) is added to the configuration to upgrade the diesel
properties of density and cetane. The PTU will allow their refinery to produce
100% of the diesel pool as 10 ppm sulphur EURO IV diesel, a premium grade.
Technology Licensing
The configuration of the proposed refinery
has been designed by a joint team of experts from RPL, RIL, its Affiliates,
Bechtel and UOP LLC (“UOP”). It is similar to that of RIL’s existing refinery
at Jamnagar.
Encouraged by the successful operations of
RIL’s existing refinery, they have decided to use the same licensors as were
used by RIL (with the addition of Exxon Mobil Research and Engineering
(“EMRE”)) for all of the process units to be built in their refinery. They have
selected UOP and EMRE as the technology licensors for the proposed refinery.
They have an agreement with Bechtel (as an
authorised licensee of UOP) for certain technologies relating to major units of
the refinery including the crude distillation unit, hydrotreater, catalytic
reforming unit, fluid catalytic cracking unit and the delayed coker unit (using
Foster Wheeler technology). In addition, UOP has been appointed as the managing
licensor for the refinery, responsible for providing, among other things, the
capacity rating for the equipment, the integrated optimization model and the
operating and consumption guarantees. UOP is a leading licensor of refinery and
petrochemicals technologies in the world with substantial experience in the
area, having provided licenses to more than 700 refineries globally. RIL has
licensed technology from UOP for its paraxylene plant at Patalganga and its
existing refinery at Jamnagar. EMRE will be the technology licensors for the
alkylation and butamer units. EMRE is a Virginia (USA) based leader in
petroleum refining technology and has licensed technology to more than 60
greenfield refineries and over 1,000 refining units.
Implementation Strategy
Bechtel has been given the single point
responsibility for the implementation of the Project. It will provide detailed
engineering, project management, site support and construction supervisory
services as well as the offshore supply of equipment and bulk materials for the
Project. They will also utilise RIL and its affiliates for construction
services. They expect that this will enable us to leverage local construction
and project implementation capabilities while utilising Bechtel’s technical,
project management and engineering expertise. Bechtel’s services will be
provided pursuant to six separate, but inter-related agreements as outlined
below (the “Bechtel Agreements”). Under the Bechtel Agreements, Bechtel has no
liability for consequential damages or any loss of profits that they may suffer
as a result of its failure to perform. Bechtel may, pursuant to all of the
Bechtel Agreements (except the License and Basic Engineering Agreement) seek an
adjustment to the Project’s schedule where a force majeure event has
occurred, such as an act of war or terrorism or a strike by a national category
of workers if such an event lasts longer than five days, or 20 days in the
aggregate should there be a number of such events. The Bechtel Agreements are
governed by the laws of India, with disputes to be settled by binding
arbitration.
The following is a brief summary of the
services provided under the Bechtel Agreements:
_ Umbrella Services Agreement: Bechtel is responsible for the achievement
of certain performance standards and the establishment of parameters for yield,
capacity, utility consumption, quality, safety and statutory and environmental
standards. They are obligated, under this
agreement, to effect a “marine-and-erection” insurance policy, the details of
which are discussed below under “–Insurance”.
_ License and Basic Engineering Agreement: Bechtel (with authority from UOP as its
licensor) grants process licenses and provides basic engineering services for certain
refinery and polypropylene units, including providing us with design
specifications, process technology, know-how and technical information for
refinery and polypropylene process units other than the EMRE refinery units.
_ Engineering Services Agreement: Bechtel is required to provide the detailed
design and engineering for the Project overall, including the preparation and
supply of engineering information in sufficient detail for the procurement of
equipment, materials, civil and environmental engineering services and other
general engineering services in connection with the construction, operation and
maintenance of the refinery and polypropylene plant.
_ Equipment Supply Agreement: Bechtel will supply the basic equipment
necessary to design, construct and operate the refinery and polypropylene
plant. Bechtel will also arrange to supply and furnish all general arrangement
drawings, manufacturers’ catalogues and other literature relevant to the
equipment prior to the date of shipment in each case.
_ Site Services and Assistance Agreement: Bechtel is required to provide technical
assistance in relation to the construction and commencement of operations for
the Project. In particular, Bechtel’s responsibility includes providing
technical assistance in connection with the erection of all items of equipment,
the construction of process units, utilities and offsite facilities, testing
and start-up of the project during six months prior to the start-up date and up
to 12 months
after the start-up date.
_ Project Management Services Agreement: Bechtel will provide overall project
management services including the management, monitoring and reporting with
respect to the implementation of the Project, timely assessments, the periodic
monitoring of all factors likely to affect the Project’s schedule or quality
and recommending, instituting and implementing remedial actions in connection
with each of the foregoing. Bechtel will also gather and prepare project
documentation, render construction advisory services such as the administration
of construction contracts, the coordination, inspection, management and
monitoring of the work of contractors and the preparation of progress reports.
In addition to these agreements, RIL has also entered into three license and engineering
agreements with EMRE (the
“EMRE Agreements”) to upgrade various
processes that can add value to the products and to enable such products to
meet stringent quality specifications. They have requested RIL to assign the
EMRE licenses to us in connection with their refinery and polypropylene plant.
Operational support services by RIL
Crude Oil and Other Feedstock Procurement
They intend to enter into long-term
contracts with RIL for the provision of procurement services for crude oil and
other feedstocks. They hope to leverage RIL’s experience and expertise in
procurement of crude oil and other feedstock for its existing refinery, which
has been operating at near 100% utilisation since it commenced operations in
2000. RIL currently procures approximately 660 KBPSD of crude oil for its
existing refinery from various suppliers in the Middle East, West Africa and
Latin America, through a combination of term contracts and spot purchases. The
term contracts give RIL partial security of supply. When operations begin at
their proposed refinery, its requirements for crude oil combined with the
requirements for RIL’s existing refinery will be nearly double of RIL’s current
requirements. They will rely on RIL to provide us crude oil procurement
services. They understand from RIL that, in line with existing practice, the
crude oil for both refineries will continue to be procured through a
combination of term contracts and spot purchases.
They believe that this procurement strategy
will lead to lower costs of procurement due to synergies in terms of higher
economies of scale in purchasing, better negotiating power and enhanced
flexibility in scheduling. Although, since commencing operations at its
existing refinery in 2000, RIL has stheirced the majority of its crude oil
supply from the Middle East, RIL has also procured certain quantities of its
crude oil supply from outside the Middle East. The extent of such supply is
driven by economic and strategic needs. The grades of crude oil from outside
the Middle East, such as grades from West Africa and South America, are
procured partly on term contracts and partly on a spot basis. They propose to
adopt a similar strategy for meeting their crude oil requirements, with RIL
providing the necessary procurement services. For a complex refinery such as
their proposed refinery, with the ability to process many grades of crude oil,
an optimal volume of spot procurement offers additional value enhancing
opportunities. Spot volumes will give us the ability to adjust their crude mix
to ever-changing market dynamics and also enable us to manage any unplanned
refinery problems in a better manner. Under operating conditions, the feedstock
mix will consist of several varieties of crude oil depending on market
conditions and price differentials between the heavier and lighter crude
varieties.
The proposed refinery will require catalysts
and other chemicals for various production processes. Catalysts are procured
from a variety of international suppliers. All other chemicals are also freely
available in global markets.
Reliance Petroleum Limited
Outstanding Litigation
(A) Against their Directors
Criminal Cases filed against Mr. Mukesh D.
Ambani
_ There are eleven criminal cases which have
been filed against their Director, Mr. Mukesh D. Ambani amongst others. The
details of the same are as provided below:
a) For non conversion of Optionally Fully
Convertible Debentures (“OFCDs”) issued by the erstwhile Reliance Polypropylene
Limited, Mr. Santosh Tyagi, a holder of the OFCDs, filed a criminal case before
the Special Court for Economic Offences, Jaipur, under Section 63 of the
Companies Act alleging that false statements have been made in the prospectus
pertaining to the issue of OFCDs. The Special Court for Economic Offences took
cognizance of the offences alleged and issued summons interalia to Mr.
Mukesh D. Ambani. Against the order of the Special Court for Economic Offences
taking cognizance, the accused filed a Revision Petition before the Sessions
Court, Jaipur, which is pending disposal.
b) For non conversion of OFCDs of the
erstwhile Reliance Polyethylene Limited, Mr. Jairam Jangid has filed a criminal
case before the Special Court for Economic Offences, Jaipur, under Section 63
of the Companies Act alleging that false statements have been made in the
prospectus pertaining to the issue of OFCDs. The Special Court for Economic
Offences took cognizance of the offence alleged and issued summons interalia
to Mr. Mukesh D. Ambani. Pending disposal of a petition for quashing filed
by the accused, the High Court of Rajasthan has stayed the proceedings before
the Special Court for Economic Offences, Jaipur.
c) For alleged non receipt of the shares in
the erstwhile Reliance Polypropylene Limited and Reliance Polyethylene Limited
sent for transfer in 1994, to the then registrar and transfer agents of RIL on
a complaint filed by one Mr. Bhanwarlal Bothra, the Chief Judicial Magistrate
took cognizance of the offences alleged and issued summons inter alia to
RIL and Mr. Mukesh D. Ambani under Section 406 and 420 of the Indian Penal Code
(“IPC”). Pending disposal of a petition for quashing filed by the accused, the
High Court of Patna has stayed the proceedings before the Chief Judicial Magistrate,
Patna.
d) For the alleged non transfer of 200 share
in the erstwhile Reliance Petroleum Limited, on a complaint filed by one Mr.
Bharat Bhushan Singh, the Chief Judicial Magistrate, Patna has taken cognizance
of the offences alleged and issued summons, inter alia, Mr. Mukesh D.
Ambani under Section 403 and 420 read with section 120-B of IPC. Pending
disposal of a petition for quashing filed by the accused, the High Court of
Patna has stayed the proceedings before the Chief Judicial Magistrate, Patna.
e) On a complaint filed by one Mr. Bhupinder
Singh, the Chief Judicial Magistrate, Hissar issued summon interalia to
Mr. Mukesh D. Ambani under Section 406 & 420 of the IPC. In the complaint
it is alleged that the complainant was not provided with the mobile phone
service although his cheques for deposit and rentals were encashed. Pending
disposal of a petition for quashing filed by Mr. Mukesh D. Ambani, the Punjab
and Haryana High Court has stayed the proceedings before the Chief Judicial
Magistrate, Hissar.
On a complaint filed by one Ms. Shobha Jha,
the Chief Judicial Magistrate, Patna issued summons inter alia to Mr.
Mukesh D. Ambani under Sections 465, 467, 468, 469, 471 and 120(B) of the IPC.
In the complaint it is alleged that although the complainant is not a
subscriber of Reliance India Mobile phone, she was receiving bills for usage of
the phone. Pending disposal of a petition for quashing filed by the accused,
the High Court of Patna has stayed the proceedings before the Chief Judicial Magistrate,
Patna.
g) On a complaint filed by one Mr. Ravi
Fogla, the Additional Chief Metropolitan Magistrate, Kolkata issued summons inter
alia to Mr. Mukesh D. Ambani under Sections 385, 420, 511 and 120(B) of
IPC. In the complaint it is alleged that although the complainant is not a
subscriber of Reliance India Mobile phone, he was receiving bills for usage of
the phone. Pending disposal of a petition for quashing filed by the accused,
the Calcutta High Court has stayed the proceedings before the Additional Chief
Metropolitan Magistrate, Kolkata.
h) On a complaint filed by one Mr. Suresh
Pal, the Chief Judicial Magistrate, Kurukshetra issued summons inter alia to
Mr. Mukesh D. Ambani under Sections 420, 467, 468, 471 and 120(B) of IPC. In
the complaint it is alleged that although the complainant is not a subscriber
of Reliance India Mobile phone, he was receiving bills for usage of the phone.
Pending disposal of a petition for quashing filed by the accused, the Punjab
and Haryana High Court has stayed the proceedings before the Chief Judicial
Magistrate, Kurukshetra.
i) On a Complaint filed by one Mr. Prafulla
Kumar Mishra, the Sub Divisional Judicial Magistrate, Uditnagar issued summons,
inter alia, to Mr. Mukesh Ambani under sections 199, 406, 409, 418, 420,
427, 468, 477 and 34 of IPC. In the complaint it is alleged that the
Complainant, a subscriber of Reliance India Mobile Phone was provided defective
handset and deficient services. It is also alleged that although complainant
was not using the mobile phone, he continued to receive the bills in respect of
the mobile phone. Pending disposal of the Petition for quashing filed by Mr.
Mukesh Ambani, the Orissa High Court has stayed the proceedings before the Sub
Divisional Judicial Magistrate, Uditnagar.
j) On a complaint filed by one Mr. Anil
Kumar, the Chief Judicial Magistrate, Patna issued summons inter alia to
Mr. Mukesh D. Ambani under Sections 419, 420, 468, 469, 34 and 500 of IPC. In
the complaint it is alleged that although the complainant is not a subscriber
of Reliance India Mobile phone, he was receiving bills for usage of the phone.
Pending disposal of a petition for quashing filed by the accused, the High
Court of Patna has stayed the proceedings before the Chief Judicial Magistrate,
Patna.
k) On a complaint filed by one Mr. Parasmal
Choradia, the Chief Judicial Magistrate, Raipur issued summons inter alia to
Mr. Mukesh D. Ambani under Sections 420, 465, 468 and 474 of IPC. In the
complaint it is alleged that Mr. Mukesh D. Ambani (as Chairman of Reliance
Telecom Limited) and an official of Reliance Telecom Limited forged certain
document and changed the tariff plan of the complainant. Pending disposal of a
petition for quashing filed by the accused, the High Court of Chhastigarh has
stayed the proceedings before the Chief Judicial Magistrate, Raipur.
As per Website
Details
About Us:
They are a start-up company, formed to set up a greenfield petroleum
refinery and polypropylene plant to be located in a Special Economic Zone in
Jamnagar in the state of Gujarat in western India. Their proposed refinery and
polypropylene plant will be located adjacent to the existing refinery and
petrochemical complex of their Promoter, Reliance Industries Limited (“RIL”),
the largest private sector company in India with assets of over Rs.806 billion
(approximately US$ 18 billion) as of March 31, 2005.
RIL is the only private sector company from India to feature in the
Fortune Global 500.
Media
Release
RPL
refinery project completes one year since kick-off.
Significant
progress achieved on all fronts
Refinery
execution on fast track for completion by December 2008
MUMBAI,
12th January 2007:
Reliance Petroleum Limited (RPL) successfully completed the first year of implementation
of its world-class complex refinery, being built in a special economic zone at
Jamnagar. The refinery project was kicked off in December 2005.
The
refinery project has made rapid strides on all implementation fronts, including
physical progress at the site and has achieved several key milestones during
the first year itself. Significant accomplishments since the project kick-off
include the following:
• All
statutory approvals, including SEZ approvals, have been obtained.
• The
equity financing of the project was completed through a highly successful IPO
that established several new in the Indian capital markets.
•
Through successful global syndication, RPL obtained commitments for US$2bn of
debt, which is the largest foreign currency financing for any single project
from India.
• RPL
concluded a strategic partnership with Chevron.
• Basic
engineering and a major part of detailed engineering is complete.
• All
long lead and critical equipments have been ordered and remaining procurement/
contracting activities are nearing completion.
•
Construction work at site has taken-off and is progressing at a rapid pace.
The
fast track implementation of the project has led to substantial change in the
skyline of the project site with civil, structural and mechanical works in full
swing. RPL has developed sufficient site infrastructure to sustain construction
on fast track and is ready to receive peak implementation workforce required
for the project. RPL has thus set a perfect launch pad for creating new
industry records for project implementation and is well on its way towards
scheduled completion by December 2008.
The
engineering progress achieved thus far has been commendable. Nearly two-thirds
of detailed engineering work is complete and a substantial part of concrete,
underground and structural steel drawings have been released to the site. A
massive 3D site modelling effort is underway and is expected to provide
benefits of superior engineering quality, reduced construction interferences
and minimum rework at site. Over 7,500 engineers are working on the project at
several interconnected locations across the globe.
On the
procurement front, RPL has made significant strides. All long lead and critical
equipments have been ordered and a substantial part of overall procurement and
contracting activities has been completed. Equipment deliveries have commenced
and more than 80% of structural steel and a significant part of piping
materials have also been delivered to the site. Emphasis has now shifted
towards vendor monitoring and follow-up for ensuring compliance with quality
and delivery commitments.
The
construction activities have gained further momentum with over 600,000 cubic
meters of concreting already completed (equivalent to several scores of
skyscrapers). The month of December 2006 witnessed the creation of a new record
with over 168,550 cubic metres of concrete poured in a single month. Through
this, RPL has even surpassed the record created during the implementation of
RIL’s refinery at Jamnagar. Structural works have taken off with more than
30,000 tonnes of steel and tankage fabrication work already completed.
At the
industry level, the global refining fundamentals remain intact and promise exciting
value creation opportunity for complex refineries. The continuing shortage of
global refining capacities coupled with tightening product specification, slow
growth in desulphurization capacities and widening light heavy differentials is
expected to result in widening demand supply gap for transportation fuels
globally. Buoyant outlook for the global economy augurs well for petroleum
products demand and reinforces confidence on the long term prospects for the
sector.
Commenting
on the progress Mr Mukesh Ambani, Chairman of Reliance Petroleum Limited said “I am extremely encouraged by the rapid
progress made by RPL on all aspects during the first year of implementation.
The substantial progress achieved at site gives me further confidence that the
refinery is well on its way towards scheduled completion by December 2008. RPL
is well positioned to capitalise on the emerging opportunities in the sector
and create superior value for its shareholders”.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper payments
to government officials for engaging in prohibited transactions or with
designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l Anti-Money
Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws, regulations
or policies that prohibit, restrict or otherwise affect the terms and
conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.44.17 |
|
UK Pound |
1 |
Rs.85.58 |
|
Euro |
1 |
Rs.58.67 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
2 |
|
PAID-UP CAPITAL |
1~10 |
5 |
|
OPERATING SCALE |
1~10 |
3 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
- |
|
--PROFITABILIRY |
1~10 |
- |
|
--LIQUIDITY |
1~10 |
4 |
|
--LEVERAGE |
1~10 |
4 |
|
--RESERVES |
1~10 |
4 |
|
--CREDIT LINES |
1~10 |
4 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
26 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this report.
The assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|