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					INDIA

RIL IN
Stock price As of 11 Nov 09 12-month target Upside/Downside Valuation
- Sum of Parts

Outperform Rs2,107.95
Rs % Rs 2,400.00 13.9 2,400.00 energy 3,464 210 74,486 1,643

Reliance Industries
Shopping in America
Event
 Recent press reports suggest RIL may be looking to acquire refining and oil

product marketing (R & M) assets in the US. We continue our thematic series on RIL’s acquisition potential.
 We believe that RIL’s stated strategy for inorganic growth, coupled with its

GICS sector Market cap Rsbn 30-day avg turnover US$m Market cap US$m Number shares on issue m Investment fundamentals
Year end 31 Mar Total revenue EBITDA EBITDA growth EBIT EBIT growth Reported profit Adjusted profit EPS rep EPS adj EPS adj growth PER adj Total DPS Total div yield ROE EV/EBITDA Net debt/equity P/BV

increased need for a distribution and marketing network for its high-end products, has enhanced the potential for acquisitions, especially in the qualitydiscerning large US market.

Impact
 RIL’s need for overseas acquisition. RIL has commissioned its 580kbpd

2009A 2010E 2011E 2012E bn 1,492.6 1,739.3 2,145.5 2,291.6 bn 234.3 353.1 401.3 446.1 % 1.3 50.7 13.7 11.2 bn 183.3 270.4 314.7 355.7 % 1.0 47.5 16.4 13.0 bn 152.2 210.9 257.9 307.7 bn 155.5 210.9 257.9 307.7 Rs Rs % x Rs % % x % x 92.65 128.36 156.99 187.32 94.65 128.36 156.99 187.32 0.7 35.6 22.3 19.3 22.3 16.4 13.4 11.3 12.60 0.6 14.6 16.8 36.5 2.7 17.46 0.8 16.4 11.1 35.6 2.7 21.36 1.0 18.2 9.8 18.8 2.3 25.48 1.2 18.6 8.8 2.1 1.9

high-end refinery earlier in the year and hence requires a large discerning consumer base. Given its larger share of Euro IV/V compliant gasoline in the product slate, the US would be the natural market for the new refinery. Given the unattractiveness of the domestic retail fuel market, superior quality of RIL’s products and its large production capacity, we believe RIL will benefit from greater control of overseas distribution network to maximise its returns.
 Types of assets that fit the bill. Product differentiation, especially branded

products, is essential to enhance the returns in the auto-fuel retailing market. In addition, RIL will likely be looking for a captive product storage and distribution network in the US. Mid-sized auto-fuel marketers with distribution assets could be primary targets. In our view, US-based R & M companies, Tesoro or Delek could be a good fit for RIL (Fig 8). Valero and Sunoco are also a good fit, but quote at the highest 1-year forward EV/EBIDTA (Fig 11).
 Build or buy? GRM plunge provides opportunity. Weak demand, coupled

RIL IN rel BSE Sensex performance, & rec history

with increased capacity, has plunged GRMs to US$ 1.3/bbl (Singapore complex, Fig 5), well below the average operating cost of most refineries. Valero has shut the 235kbpd Aruba refinery. Sunoco has announced plans to shut its 145kbpd Eagle Point refinery. Tesla refinery was recently transacted at a fraction of the price it cost RIL to build its highly competitive export refinery (Fig 6). We feel buying is currently a better opportunity than to build.
 Does RIL have the financial muscle? RIL holds US$4bn in cash, US$8bn in

Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.

treasury stock and if it doubles its current net debt-to-equity of 0.35x it can borrow another US$10bn, ie, a total potential of ~US$22bn. The largest R & M company in the US has a US$12bn EV; the others are less than US$7bn.

Source: FactSet, Macquarie Research, October 2009 (all figures in INR unless noted)

Earnings and target price revision
 No change.

Price catalyst
 12-month price target: Rs2,400.00 based on a Sum of Parts methodology.  Catalyst: Gas pricing settlement and new growth initiatives.
Jal Irani 91 22 6653 3040 Amit Mishra, CFA 91 22 6653 3051 jal.irani@macquarie.com amit.mishra@macquarie.com

Action and recommendation
 Reiterate Outperform. We believe RIL is poised for sizeable volume-driven

12 November 2009

profit growth, despite cyclical pressure on margins.

Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our website www.macquarie.com.au/research/disclosures.

Macquarie Research

Reliance Industries

Fig 1 Other stocks mentioned in the report
Company Delek US Alon USA Energy Western Refining Holly Corp Tesoro Frontier Oil Sunoco Valero Bloomberg Code DK US ALJ US WNR US HOC US TSO US FTO US SUN US VLO US Current price (lcy) 7.0 7.3 5.0 28.4 13.4 13.4 27.5 17.3 Upside/ Downside 20% -10% 57% 2% 21% Recommendation Macquarie analyst NR NR NR OP UP OP N N Jason Gammel Jason Gammel Jason Gammel Jason Gammel Jason Gammel

Source: Bloomberg, Macquarie Research, November 2009

Why a potential acquisition in the US?
 Reliance owns two of the three largest and most complex refineries in the world. It owns 25% of

the world’s most complex refining capacity. The new refinery is capable of producing Euro V compliant gasoline that would have a quality premium in the US market. Also, RIL would like to have control over the distribution network as it looks to place its products in a very competitive market.

Fig 2 RIL owns two of three largest complex refineries
Company BP RIL SEZ RIL EOU CITGO Exxon Mobil Exxon Mobil Source: IEA, RIL, Macquarie Research, November 2009 Location Texas City Jamnagar Jamnagar Lake Charles Baytown Beaumont CDU kb/d 433 580 660 320 428 320 Nelson Complexity 14.2 14.0 11.3 11.2 10.9 10.8

Fig 3 RIL owns 25% of world’s most complex refining capacity
Company Conoco Ultramar Diamond Shell/Texaco Exxon Mobil BP-Amoco Reliance Petroleum CITGO (PDVSA) Chevron USA BP-Amoco Corp Oberrheinische Valero Energy Corp Shell/Tex/ S Aramco Maraven Phillips Co. Lyondell CITGO Chevron USA Shell Oil Co. USA RIL - EOU CITGO Petroleum Corp KOCH Refining Company Total Source: IEA, RIL, Macquarie Research, November 2009 Location Immingham Martinez Martinez Torrance Tex City Jamnagar Corp Cristex Richmond Toledo Karlsruhe Benicia Del City Cardon Borger Houston Pascagulamss Deer PK Jamnagar Lake Charlou Rosemount CDU (kb/d) 170 108 151 130 433 580 133 229 137 116 128 140 286 125 265 295 268 660 320 262 4,936 Nelson complexity 16.8 16.6 15.1 14.9 14.2 14.0 13.8 13.7 13.4 13.4 13.3 13.1 12.8 12.7 12.7 11.9 11.4 11.3 11.2 11.1

 The US is by far the largest oil products market, consuming one-fifth of global refinery products.

It also has amongst the toughest environmental norms. RIL's large, high-end refinery would need an avenue to sell in a market that is willing to pay a premium for its products. The US ideally fits the bill.

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 Also, RIL has a high-quality back-end, ie, a large refinery. Now it needs to enter a market that

provides significant value for these high-end products. Moreover, non-fuel retail content boosts IRRs. Non-fuel organised retail presents some synergies with its recent foray into this space. Outlets with a higher mix of non-fuel content results in a higher IRR, as can be seen in the more mature markets such as the US (see chart below).

Fig 4 Contribution from non-fuel retail could boost returns earned
Fuel/ non fuel sales mix Typical IRR Market examples 4-7% - India - China - Fuel - Vehicle related product/ service 100% 80% 7% - Brazil - Italy - Fuel - Basic convenience impulse non-fuel products 100% <40% 13-25% - US - France 100%

Value proposition

- Strong non-fuel value proposition

Source: McKinsey and Co, Macquarie Research, November 2009

Refining margins are below operating costs
Last week, Singapore gross refining margin (GRM) continued to decline to US$1.27/bbl, down 22% WoW. The gasoline-crude oil spread was down, as demand could not absorb incremental supply and the market expects China exports to increase in November. Naphtha widened the negative margin, as downstream margins remained weak and supply from the Middle East increased. Diesel and kerosene margins were up on reduced supply, as oil refineries have cut utilisation rates.

Fig 5

Singapore gross refining margin* trends

*32% Gasoline, 19% Kerosene, 16% Diesel, 7% Naphtha, 3% LPG, 23% Fuel Oil Source: Bloomberg, Reuters, Macquarie Research, November 2009

Recent refinery acquisitions in US happened below capital cost
Holly Corp’s acquisition of Sinclair Oil Corporation’s Tulsa refinery
 Holly will pay a total consideration of US$128.5m, comprising US$54.5m cash and 2.789m HOC

common shares (valued at US$74m based on the 15-day average price before the closing of the transaction). Incremental to the purchase, Holly will acquire inventory on hand at the refinery, estimated to be about 500k bbls, which would add ~US$40m of working capital.
 Taking full capital expenditures into account for both the Tulsa acquisition and future expansions

and modifications, the company has spent US$232m for 125k bpd of distillation capacity, or US$1,856/bpd of capacity. The combined refineries have a Nelson Complexity Index rating of 14.0, making it one of the most complex refining systems in the Mid-Continent region. Adjusting for complexity, the aggregate transactions cost US$133/complexity barrel day of capacity, at the low end of transactions entered into since 2000.
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Reliance Industries

 The current M&A price for the refineries is significantly lower than the new capacities, even on a

complexity adjusted basis. Reliance’s new SEZ refinery was built at a cost of ~US$6bn or US$739/complexity bbl.

Fig 6 Recent US refining acquisitions (2000–09)
Refinery Wood River, IL Alliance, LA Corpus Christi, TX Yorktown, VA Woods Cross, UT Memphis, TN Golden Eagle, CA Commerce City, CO Coffeyville, KS Eagle Point, NJ Good Hope, LA Delaware City, DE Aruba Tyler, TX Premcor (4 refineries) Marathon Ashland (38% interest) Pasadena, TX Billings, MT Paramount, CA (2 refineries) Giant Industries Acq (3 refineries) Houston, TX North Atlantic Refining, NL Wilmington, CA Lima, OH 34.6% stake in Lion (El Dorado) Krotz Springs Tulsa Refinery Reliance SEZ Refinery, Jamnagar Year Seller Buyer Price in '000 US$ Tosco Tosco Valero Giant Holly Premcor Tesoro Suncor Pegasus Sunoco Valero Premcor Valero Delek Valero Marathon Petrobras Connacher Alon Western Lyondell Harvest Tesoro Husky Delek Alon Holly Corp 420,000 660,000 331,000 127,500 25,000 315,000 945,000 150,000 281,000 111,000 400,000 800,000 465,000 78,100 8,000,000 3,000,000 370,000 55,000 464,000 1,500,000 5,200,000 1,500,000 1,380,000 1,900,000 88,200 433,000 232,000 6,000,000 Capacity (b/d) 290,000 250,000 115,000 62,000 25,000 190,000 168,000 58,000 100,000 150,000 185,000 175,000 315,000 60,000 790,000 355,000 50,000 8,000 66,000 103,500 282,600 105,000 100,000 165,000 25,950 85,000 125,000 580,000 Price/barrel Complexity EV/ Complexity (in US$) bbl 1,448 2,640 2,878 2,056 1,000 1,658 5,625 2,586 2,810 740 2,162 4,571 1,476 1,302 10,127 8,451 7,400 6,875 7,030 14,493 18,401 14,286 13,800 11,515 3,399 5,094 1,856 10,345 8.8 10.8 16.9 9.5 8.7 7.1 12.6 6.7 9.5 8.4 12.1 11.8 7 7.9 9.8 11.5 8.7 10.4 6.1 8.6 11.7 6.8 16.4 9.6 9.5 6.5 14.0 14.0 165 244 170 216 115 234 446 386 296 88 179 387 211 165 1,033 735 851 661 1,153 1,685 1,573 2,101 841 1,199 358 784 133 739

2000 Equilon 2000 BP Amoco 2001 El Paso 2002 BP 2002 ConocoPhillips 2002 Williams 2002 Valero 2003 ConocoPhillips 2003 Farmland 2003 El Paso 2003 Orion 2004 Motiva 2004 El Paso 2005 Crown 2005 Premcor 2005 Ashland 2005 Pasadena Refining 2006 Holly Corp 2006 Paramount 2006 Giant Industries 2006 Citgo 2006 Vitol 2007 Shell 2007 Valero 2007 Lion 2008 Valero 2009 Sinclair Oil 2009 -

Source: Oil & Gas Journal, Macquarie Research, November 2009

What type of company should RIL target for acquisition?
The long-term economics of US refiners-cum-retailers suggest that 22% of the most attractive/prominent sites for auto-fuel retail in North America contribute nearly 71% of net profits (see chart below). Product differentiation, especially branded products, is essential to enhancing returns. Hence, we believe the large auto-fuel retailers could be RIL's primary targets.

Fig 7 Pareto’s principle – 22% of retail outlets contribute 71% of profits

Source: McKinsey and Co, Macquarie Research, November 2009

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Which US companies fit the bill? We have run a competence matrix on refining and retailing parameters. Refining capacity, complexity and margins, and retail network and marketing infrastructure (marked in green in the table) are the key criteria worth focusing on, in our view. Key company-related conclusions
 Valero is a stand out on most of the key parameters, in our opinion. The high level of Valero's

branded product portfolio further enhances the attractiveness for RIL to market the world's highest amount of high-end distillates, especially in a quality-discerning market like the US.
 RIL needs a retail network to flog its large refining volumes. Hence, we think pure refiners are

likely low-takeover targets. This would rule out Frontier Oil and make Alon, Western Refining and Holly Corp low-probability (although perhaps niche) purchases.
 We think Sunoco and Tesoro would be attractive takeover candidates given their large retail

and infrastructure networks.
 Delek US could also be a niche candidate, in our view. Although it has a relatively modest

retail network and marketing infrastructure, Delek’s lack of refining capacity would fit well with RIL's strategy to market its own refining products from India.

Fig 8 Comparison of refining and marketing assets
Company Country Refining Number of Location Refining GRM capacity refineries of complexity refineries mtpa Delek US Holdings US 3 1 Texas, USA Moderate 2Q FY09A 14.52 Source of crude Retail network Marketing network infrastructure Locations Geographical Other remarks distribution of revenues US/ Others Canada Abilene, 100 Texas and San Angelo Unusual configuration produces 90% light products and less than 2% heavy

No. of stores Locally 456 produced grade

Key areas covered 93% in 3 refined Tennessee petroleum Alabama products and Virginia terminal, 114 miles of product pipeline South Central, Southwestern and Western USA Arizonia, Colorado and New Mexico None 2,600 miles of petroleum pipelines

Alon USA Energy

US

7.9

3

Texas, Low to California, Moderate and Louisiana

5.37

1,200

100

Western Refining

US

11.8

4

Holly Corp. US

5.6

2

W Texas, Moderate New Mexico, East Coast of Virginia New Moderate Mexico, Utah

12.2

160

100

16.7

None

Tesoro Corp.

US

33

7

Frontier Oil US Corp.

8.6

2

Moderate Washingto n, California, Alaska, Hawaii, Utah Wyoming, High Kansas

12.7

Domestic 990 (>445 17 states in 900 miles of and company USA crude and Foreign owned) product pipelines

Texas, 100 New Mexico, Oklahoma and Utah 100

Refined product terminals in several Southwest and Rocky mountain states

19.8

Domestic None and Canada

Sunoco Inc. US

45.5

4

Valero Energy

US

155

16

Low to Philadelphi Moderate a, New Jersey, Ohio, Oklahoma Gulf High Coast, West Coast, Midcontinent, North East

4.95

Some interest through minority stake in other companies Africa, 4,700 24 states Owns 5,400m of Canada, (1144 (East Coast pipelines and 38 Asia, company and Midterminals Domestic owned) western)

None

100

100

Product terminal and blending facility located near Denver, El Dorado Other businesses Chemicals, Logistics and Coke

4.64

80% 5,800 in imported USA (Co 1010) 865 in Canada (Co - 412)

USA, Canada and Caribbean

80

20

Valero markets products in 44 US states, Canada, Latin America and the Caribbean region

Source: Company data, Macquarie Research, November 2009

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Furthermore, the two charts below suggest that Valero has the highest geographically diversity and highest complexity, providing the greatest reach for the highest-value products across the US. Holly could be ruled out given its complete lack of geographically diversification.

Fig 9 Most geographically diverse refining capacity

Fig 10

Valero has the highest Nelson Complexity

Source: Oil and Gas Journal, Valero estimates, November 2009

Source: Oil and Gas Journal, Valero estimates, November 2009

Which US refiners present value?
 Valero and Sunoco are the largest, but have the highest 1-year forward EV/EBITDA.  Tesoro has the second-lowest EV/reserves. It also quotes at the lowest 1-year forward P/BV. In

addition, its large retail network actually makes it attractive. Asset stripping could be a possible strategy – sell or shut down refining assets and flog Reliance's high-quality products through their significant networks.
 Delek's lack of earnings, small-ticket market cap, niche marketing, but very little refining

capacity, also make it a potential acquisition candidate, in our view.

Fig 11
Company

Financial comparison metrics – US independent refiners and marketers
Country Market Enterprise Price Cap Value Perf. (1 (US$mn) (US$mn) yr %) 2 yr fwd EPS CAGR (%) (7.7) NM (26.3) 39.0 (24.8) 63.7 (54.7) (33.1) (6.3) EBIDTA Margin (%) 1yr fwd EV/ EBITDA (x) 5.5 6.1 4.5 8.3 4.8 5.5 10.8 9.2 6.8 Current 1 yr fwd PER (x) PER (x) 2 yr fwd 1 yr fwd 1 yr fwd PER (x) P/BV (x) RoE (%)

Refining & Marketing Delek US Alon USA Energy Western Refining Holly Corporation Tesoro Frontier Oil Sunoco Valero Energy Average/Sum

USA USA USA USA USA USA USA USA

376 340 445 1,428 1,872 1,402 3,217 9,752 18,833

610 1,262 1,449 2,395 3,177 1,266 6,198 15,522 31,879

36.4 -25.9 -39.3 60.2 32.2 10.4 -12.7 -9.6 6.5

3.9 3.2 4.5 4.4 2.8 5.2 1.7 2.5 3.5

14.0 4.1 5.3 11.9 6.6 17.3 3.3 3.4 8.2

143.1 NM 16.8 19.7 NM 15.9 9.3 NM 40.9

16.5 NM 9.7 6.2 11.8 6.5 16.1 7.7 10.6

0.7 0.7 0.6 2.4 0.6 1.2 1.3 0.6 1.0

3.7 -9.2 4.5 12.8 -0.9 -1.7 -0.1 -2.6 0.8

Source: Bloomberg, Macquarie Research, November 2009

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Reliance Industries (RIL IN, Outperform, Target Price: Rs2,400.00)
Quarterly Results Revenue Gross Profit Cost of Goods Sold EBITDA Depreciation Amortisation of Goodwill Other Amortisation EBIT Net Interest Income Associates Exceptionals Forex Gains / Losses Other Pre-Tax Income Pre-Tax Profit Tax Expense Net Profit Minority Interests Reported Earnings Adjusted Earnings EPS (rep) EPS (adj) EPS Growth yoy (adj) m m m m m m m m m m m m m m m m m m m 1Q/10A 434,816 108,567 326,249 88,276 20,683 0 0 67,592 -8,649 0 0 0 5,660 64,603 -11,890 52,713 0 52,713 52,713 32.09 32.09 35.6 2Q/10E 434,816 108,567 326,249 88,276 20,683 0 0 67,592 -8,649 0 0 0 5,660 64,603 -11,890 52,713 0 52,713 52,713 32.09 32.09 35.6 3Q/10E 434,816 108,567 326,249 88,276 20,683 0 0 67,592 -8,649 0 0 0 5,660 64,603 -11,890 52,713 0 52,713 52,713 32.09 32.09 35.6 4Q/10E 434,816 108,567 326,249 88,276 20,683 0 0 67,592 -8,649 0 0 0 5,660 64,603 -11,890 52,713 0 52,713 52,713 32.09 32.09 35.6 Profit & Loss Revenue Gross Profit Cost of Goods Sold EBITDA Depreciation Amortisation of Goodwill Other Amortisation EBIT Net Interest Income Associates Exceptionals Forex Gains / Losses Other Pre-Tax Income Pre-Tax Profit Tax Expense Net Profit Minority Interests Reported Earnings Adjusted Earnings EPS (rep) EPS (adj) EPS Growth (adj) PE (rep) PE (adj) Total DPS Total Div Yield Weighted Average Shares Period End Shares m m m m m m m m m m m m m m m m m m m 2009A 1,492,606 345,101 1,147,506 234,347 51,069 0 0 183,278 -17,878 0 -3,280 0 20,775 182,896 -30,700 152,196 0 152,196 155,476 92.65 94.65 0.7 21.9 21.4 12.60 0.6 1,643 1,643 2010E 1,739,262 434,268 1,304,994 353,103 82,734 0 0 270,369 -34,598 0 0 0 22,641 258,412 -47,561 210,851 0 210,851 210,851 128.36 128.36 35.6 15.8 15.8 17.46 0.9 1,643 1,643 2011E 2,145,521 490,158 1,655,363 401,322 86,657 0 0 314,666 -27,201 0 0 0 24,038 311,502 -53,618 257,884 0 257,884 257,884 156.99 156.99 22.3 12.9 12.9 21.36 1.1 1,643 1,643 2012E 2,291,598 537,270 1,754,328 446,107 90,400 0 0 355,707 -14,900 0 0 0 25,488 366,295 -58,597 307,697 0 307,697 307,697 187.32 187.32 19.3 10.8 10.8 25.48 1.3 1,643 1,643

%

% x x

EBITDA Margin EBIT Margin Earnings Split Revenue Growth EBIT Growth Profit and Loss Ratios Revenue Growth EBITDA Growth EBIT Growth Gross Profit Margin EBITDA Margin EBIT Margin Net Profit Margin Payout Ratio EV/EBITDA EV/EBIT Balance Sheet Ratios ROE ROA ROIC Net Debt/Equity Interest Cover Price/Book Book Value per Share

% % % % %

20.3 15.5 25.0 16.5 47.5 2009A

20.3 15.5 25.0 16.5 47.5 2010E 16.5 50.7 47.5 25.0 20.3 15.5 12.1 13.6 10.7 14.0

20.3 15.5 25.0 16.5 47.5 2011E 23.4 13.7 16.4 22.8 18.7 14.7 12.0 13.6 9.4 12.0

20.3 15.5 25.0 16.5 47.5 2012E 6.8 11.2 13.0 23.4 19.5 15.5 13.4 13.6 8.5 10.7

% m m

Cashflow Analysis EBITDA Tax Paid Chgs in Working Cap Net Interest Paid Other Operating Cashflow Acquisitions Capex Asset Sales Other Investing Cashflow Dividend (Ordinary) Equity Raised Debt Movements Other Financing Cashflow Net Chg in Cash/Debt Free Cashflow Balance Sheet Cash Receivables Inventories Investments Fixed Assets Intangibles Other Assets Total Assets Payables Short Term Debt Long Term Debt Provisions Other Liabilities Total Liabilities Shareholders' Funds Minority Interests Other Total S/H Equity Total Liab & S/H Funds m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m m

2009A 234,347 -30,700 82,253 -17,878 6,462 274,484 -156,574 -363,487 0 20,775 -499,286 -20,699 692 20,782 246,008 246,784 21,982 -89,003 2009A 62,890 77,131 123,203 255,636 1,451,870 0 155,246 2,125,977 196,782 87,000 440,743 29,926 97,370 851,821 1,274,156 0 0 1,274,156 2,125,977

2010E 353,103 -47,561 -2,570 -34,598 8,702 277,076 0 -81,305 0 22,641 -58,663 -28,681 0 55,681 -153,648 -126,648 91,765 195,771 2010E 119,655 85,099 123,174 290,636 1,450,441 0 137,762 2,206,766 185,935 87,000 496,424 29,926 104,803 904,088 1,302,678 0 0 1,302,678 2,206,766

2011E 401,322 -53,618 -28,194 -27,201 9,875 302,184 0 -77,900 0 24,038 -53,862 -35,079 0 -158,189 -720 -193,987 54,335 224,285 2011E 138,991 102,232 151,274 325,636 1,441,684 0 162,586 2,322,402 226,247 87,000 338,235 29,926 116,230 797,639 1,524,764 0 0 1,524,764 2,322,402

2012E 446,107 -58,597 -9,784 -14,900 9,741 372,567 0 -73,328 0 25,488 -47,840 -41,855 0 -296,147 0 -338,001 -13,274 299,239 2012E 90,716 108,161 154,843 360,636 1,424,611 0 166,749 2,305,717 230,119 37,000 92,088 29,926 125,977 515,111 1,790,607 0 0 1,790,607 2,305,717

% % % % % % % % x x

8.8 1.3 1.0 23.1 15.7 12.3 10.2 13.3 16.2 20.7

% % % % x x

14.6 9.5 11.2 36.5 10.3 2.6 775.7

16.4 12.5 12.7 35.6 7.8 2.6 793.0

18.2 13.9 14.7 18.8 11.6 2.2 928.2

18.6 15.4 16.5 2.1 23.9 1.9 1,090.1

All figures in INR unless noted. Source: Company data, Macquarie Research, November 2009

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Important disclosures:
Recommendation definitions
Macquarie - Australia/New Zealand Outperform – return >5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return >5% below benchmark return Macquarie – Asia/Europe Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10% Macquarie First South - South Africa Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10% Macquarie - Canada Outperform – return >5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return >5% below benchmark return Macquarie - USA Outperform (Buy) – return >5% in excess of Russell 3000 index return Neutral (Hold) – return within 5% of Russell 3000 index return Underperform (Sell)– return >5% below Russell 3000 index return Recommendations – 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations

Volatility index definition*
This is calculated from the volatility of historical price movements. Very high–highest risk – Stock should be expected to move up or down 60–100% in a year – investors should be aware this stock is highly speculative. High – stock should be expected to move up or down at least 40–60% in a year – investors should be aware this stock could be speculative. Medium – stock should be expected to move up or down at least 30–40% in a year. Low–medium – stock should be expected to move up or down at least 25–30% in a year. Low – stock should be expected to move up or down at least 15–25% in a year. * Applicable to Australian/NZ/Canada stocks only

Financial definitions
All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards).

Recommendation proportions – For quarter ending 30 September 2009
Outperform Neutral Underperform AU/NZ 45.08% 39.77% 15.15% Asia 54.02% 19.10% 26.88% RSA 40.00% 45.00% 15.00% USA 42.31% 43.36% 14.34% CA 62.86% 31.90% 5.24% EUR 43.61% (for US coverage by MCUSA, 0.35% of stocks covered are investment banking clients) 39.85% (for US coverage by MCUSA, 0.35% of stocks covered are investment banking clients) 16.54% (for US coverage by MCUSA, 0.00% of stocks covered are investment banking clients)

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Macquarie Research

Reliance Industries

responsibility for the content of each research report prepared by one of its non-US affiliates when the research report is distributed in the United States by Macquarie Capital (USA) Inc. Macquarie Capital (USA) Inc.’s affiliate’s analysts are not registered as research analysts with FINRA, may not be associated persons of Macquarie Capital (USA) Inc., and therefore may not be subject to FINRA rule restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Any persons receiving this report directly from Macquarie Capital (USA) Inc. and wishing to effect a transaction in any security described herein should do so with Macquarie Capital (USA) Inc. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures, or contact your registered representative at 1-888-MAC-STOCK, or write to the Supervisory Analysts, Research Department, Macquarie Securities, 125 W.55th Street, New York, NY 10019. © Macquarie Group
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Available to clients on the world wide web at www.macquarieresearch.com and through Thomson Financial, FactSet, Reuters, Bloomberg, CapitalIQ and TheMarkets.com.

12 November 2009

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Asia Research
Head of Equity Research
Stephen O’Sullivan (852) 3922 3566 (813) 3512 7856 (813) 3512 6050 (822) 3705 8644 (8862) 2734 7521 (813) 3512 5979 (852) 3922 4774 (852) 3922 4068 (8862) 2734 7530 (6221) 515 7335 (822) 3705 8643 (822) 2095 7222 (65) 6231 2837 (632) 857 0890 (8862) 2734 7514 (662) 694 7741 (852) 3922 3571 (9122) 6653 3040 (822) 3705 8669 (603) 2059 8993 (852) 3922 3557 (8621) 2412 9020 (852) 3922 1111 (852) 3922 3568 (9122) 6653 3042 (813) 3512 7392 (822) 3705 8678 (603) 2059 8982 (632) 857 0899 (8862) 2734 7521 (8621) 2412 9007 (813) 3512 6058 (813) 3512 7853 (9122) 6653 3166 (813) 3512 7432 (813) 3512 7475 (822) 3705 8511 (603) 2059 8993 (662) 694 7753 (852) 3922 3567 (813) 3512 7421

Media
Jessie Qian (China, Hong Kong) Shubham Majumder (India) George Hogan (Japan) Prem Jearajasingam (Malaysia) Alex Pomento (Philippines) (852) 3922 3568 (9122) 6653 3049 (813) 3512 7851 (603) 2059 8989 (632) 857 0899

Transport & Infrastructure
Anderson Chow (Asia) Jonathan Windham (Asia) Wei Sim (China, Hong Kong) Janet Lewis (Japan) Chang Han Joo (Korea) ES Kwak (Korea) Sunaina Dhanuka (Malaysia) (852) 3922 4773 (852) 3922 5417 (852) 3922 3598 (813) 3512 7475 (822) 3705 8511 (822) 3705 8644 (603) 2059 8993

Automobiles/Auto Parts
Clive Wiggins (Japan) Dan Lucas (Japan) ES Kwak (Korea) Linda Huang (Taiwan) Ismael Pili (Asia) Nick Lord (Asia) Sarah Wu (China) Jemmy Huang (Hong Kong, Taiwan) Ferry Wong (Indonesia) Chan Hwang (Korea) Michael Na (Korea) Chin Seng Tay (Malaysia, S’pore) Nadine Javellana (Philippines) Matthew Smith (Taiwan) Alastair Macdonald (Thailand)

Oil and Gas
Christina Lee (Hong Kong) Jal Irani (India) Polina Diyachkina (Japan) Shawn Park (Korea) Edward Ong (Malaysia) Sunaina Dhanuka (Malaysia) Linda Huang (Taiwan) Trevor Buchinski (Thailand) (852) 3922 3571 (9122) 6653 3040 (813) 3512 7886 (822) 3705 8669 (603) 2059 8982 (603) 2059 8993 (8862) 2734 7521 (662) 694 7829 (852) 3922 3571 (9122) 6653 3052 (813) 3512 7474 (852) 3922 4731 (852) 3922 3573 (852) 3922 3581 (9122) 6653 3042 (813) 3512 7433 (822) 3705 8511 (65) 6231 2838 (65) 6231 2839 (8862) 2734 7522 (662) 694 7727 (852) 3922 3587 (852) 3922 4626 (852) 3922 3562 (852) 3922 3571 (9122) 6653 3054 (65) 6231 2981 (6221) 2598 8486 (813) 3512 7886 (852) 3922 1264 (852) 3922 3578 (813) 3512 7877 (813) 3512 7880 (813) 3512 7854 (813) 3512 7868 (813) 3512 5984 (822) 3705 8659 (8862) 2734 7526 (8862) 2734 7516 (8862) 2734 7517 (8862) 2734 7523 (852) 3922 3565 (65) 6231 2842 (852) 3922 3634 (9122) 6653 3049 (6221) 2598 8486 (813) 3512 7875 (603) 2059 8989

Banks and Non-Bank Financials

Utilities
Adam Worthington (Asia) Carol Cao (China, Hong Kong) Kakutoshi Ohori (Japan) Prem Jearajasingam (Malaysia) Alex Pomento (Philippines) (65) 6231 2981 (852) 3922 4075 (813) 3512 7296 (603) 2059 8989 (632) 857 0899 (4420) 3037 4271 (4420) 3037 4273 (8621) 2412 9008 (8621) 2412 9005 (9122) 6653 3054 (852) 3922 4076 (852) 3922 4077 (65) 6231 2841 (612) 8232 3935 (852) 3922 3570 (813) 3512 7855 (852) 3922 3582 (852) 3922 4735 (612) 8232 6539 (813) 3512 7876 (852) 3922 4073 (8621) 2412 9002 (6221) 515 7335 (813) 3512 7880 (813) 3512 7850 (822) 3705 8643 (603) 2059 8989 (603) 2059 8982 (632) 857 0899 (65) 6231 2838 (8862) 2734 7516 (662) 694 7741

Pharmaceuticals
Christina Lee (Hong Kong) Abhishek Singhal (India) Naomi Kumagai (Japan)

Commodities
Jim Lennon Max Layton Bonnie Liu Henry Liu Rakesh Arora

Chemicals/Textiles
Christina Lee (Hong Kong) Jal Irani (India) Shawn Park (Korea) Sunaina Dhanuka (Malaysia)

Property
Matt Nacard (Asia) Eva Lee (China, Hong Kong) Chris Cheng (China, Hong Kong) Unmesh Sharma (India) Hiroshi Okubo (Japan) Chang Han Joo (Korea) Tuck Yin Soong (Singapore) Elaine Cheong (Singapore) Corinne Jian (Taiwan) Patti Tomaitrichitr (Thailand) Andrew Dale (Asia) Xiao Li (China) YeeMan Chin (China) Christina Lee (Hong Kong) Rakesh Arora (India) Adam Worthington (Indonesia) Riaz Hyder (Indonesia) Polina Diyachkina (Japan)

Data Services
Andrea Clohessy (Asia) Eric Yeung

Conglomerates
Gary Pinge (Asia) Leah Jiang (China)

Economics
Rajeev Malik (ASEAN, India) Richard Gibbs (Australia) Paul Cavey (China) Richard Jerram (Japan)

Consumer
Mohan Singh (Asia) Jessie Qian (China, Hong Kong) Unmesh Sharma (India) Toby Williams (Japan) HongSuk Na (Korea) Edward Ong (Malaysia) Alex Pomento (Philippines) Linda Huang (Taiwan)

Resources / Metals and Mining

Quantitative
Martin Emery (Asia) Viking Kwok (Asia) George Platt (Australia) Patrick Hansen (Japan)

Strategy/Country
Daniel McCormack (Asia) Michael Kurtz (China) Ferry Wong (Indonesia) David Gibson (Japan) Peter Eadon-Clarke (Japan) Chan Hwang (Korea) Prem Jearajasingam (Malaysia) Edward Ong (Malaysia) Alex Pomento (Philippines) Tuck Yin Soong (ASEAN, Singapore) Daniel Chang (Taiwan) Alastair Macdonald (Thailand)

Emerging Leaders
Jake Lynch (Asia) Minoru Tayama (Japan) Robert Burghart (Japan)

Technology
Patrick Yau (Hong Kong) Zona Chen (Hong Kong) Damian Thong (Japan) David Gibson (Japan) George Chang (Japan) Michiko Kakiya (Japan) Yukihiro Goto (Japan) Michael Bang (Korea) Chia-Lin Lu (Taiwan) Daniel Chang (Taiwan) James Chiu (Taiwan) Nicholas Teo (Taiwan)

Industrials
Inderjeetsingh Bhatia (India) Christopher Cintavey (Japan) Janet Lewis (Japan) Chang Han Joo (Korea) Sunaina Dhanuka (Malaysia) David Gambrill (Thailand)

Insurance
Mark Kellock (Asia) Makarim Salman (Japan)

Find our research at
Macquarie: www.macquarie.com.au/research Thomson: www.thomson.com/financial Reuters: www.knowledge.reuters.com Bloomberg: MAC GO Factset: http://www.factset.com/home.aspx Email macresearch@macquarie.com for access

Telecoms
Tim Smart (Asia) Ramakrishna Maruvada (ASEAN) Bin Liu (China) Shubham Majumder (India) Riaz Hyder (Indonesia) Nathan Ramler (Japan) Prem Jearajasingam (Malaysia)

Sales
Regional Heads of Sales
Giles Heyring (ASEAN) Peter Slater (Boston) Thomas Renz (Geneva) Ajay Bhatia (India) Andrew Mouat (India) Stanley Dunda (Indonesia) Jason Lee (Malaysia) Gino C Rojas (Philippines) Greg Norton-Kidd (New York) Luke Sullivan (New York) Scot Mackie (New York) Sheila Schroeder (San Francisco) (65) 6231 2888 (1 617) 598 2502 (41) 22 818 7712 (9122) 6653 3200 (9122) 6653 3200 (6221) 515 1555 (603) 2059 8888 (632) 857 0761 (1 212) 231 2527 (1 212) 231 2507 (1 212) 231 2848 (1 415) 835 1235

Regional Heads of Sales cont’d
Angus Kent (Thailand) Michael Newman (Tokyo) Charles Nelson (UK/Europe) Rob Fabbro (UK/Europe) Nick Ainsworth (Generalist) (662) 694 7601 (813) 3512 7920 (44) 20 3037 4832 (44) 20 3037 4865 (852) 3922 2010 (852) 3922 2002 (44) 20 3037 4905 (852) 3922 2085 (9122) 6653 3204 (6221) 515 1555

Sales Trading cont’d
Mario Argyrides (Korea) Edward Robinson (London) Matthew Ryan (Singapore) Isaac Huang (Taiwan) Jon Omori (Tokyo) (822) 3705 8610 (44) 20 3037 4902 (65) 6231 2888 (8862) 2734 7582 (813) 3512 7838 (852) 3922 2095 (852)3922 2094 (852) 3922 2134 (852) 3922 2113 (852) 3922 2013

Sales Trading
Adam Zaki (Asia) Mike Keen (Europe) Mona Lee (Hong Kong) Brendan Rake (India) Stanley Dunda (Indonesia)

Alternative Strategies
Convertibles - Roland Sharman Depository Receipts - Robert Ansell Derivatives - Wayne Edelist Futures - Tim Smith Structured Products - Andrew Terlich

October 09


				
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