Key Note Address: India’s Role in the Global Chemical Economy made by Mr. Kamal Nanavaty, President/Cracker and Polymer, Reliance Industries Ltd. during Two-day Conference on “Vision 2020 – Indian Chemical Industry” held on 22-23 April 2009 at Mumbai.

2. India's Role in the Global Chemical Economy Kamal Nanavaty Reliance Industries Limited Chemical Week's Second India Chemical Industry Outlook April 22-23, 2009 • JW Marriott • Mumbai, India

3. Contents Structural Changes Indian Opportunity Conclusion Global Scenario

4. Global Economic Environment Recession in developed economies  collateral damage across globe

5. Boom & Bust Cycles Readjustment in Global economy Risk Reduced Government intervention Bank Conservatism Investment Economic Growth Increased Financing Rising Asset prices Rising interest rate Investments Non Viable High Debts Asset price Collapse High Inflation Reduce Debt Low Inflation Bankruptcies Boom & Bust Cycle We are Here 1 2 3 4 5 6 7 8 10 9

6. 70 Year Cycle We are in Midst of economic Mega cycle Source: Avi Nash LLC

7. Global Economy and Chemical Industry Source: CIA World Fact book 2008, Cefic Chemdata International, Datamonitor Chemical Industry comparable in size to Agricultural / Oil Industry 2008 Estimates PPP

8. Chem Factors There is a bit of Chemistry in Everything , Everywhere

9. World chemical sales  US$ 2495 billion ( 2007 excluding Pharmaceuticals ) Source: Cefic Chemdata International Others* - Oceania & Africa Rest of Europe**-Switzerland, Norway and other Central & Eastern Europe (excluding the new EU 12 countries) India 12th Largest Global Chemical Market Chemical Sales (US$) Asia = 946 EU = 736

10. Growth Trends : Chemicals Vs GDP 2020 Global Chemical trend : 3.3% Global GDP trend : 3.1% One of fastest growing chemical market in world GDP growth % Chemical growth % Size of bubble indicates size of chemical industry

11. Contents Structural Changes Indian Opportunity Conclusion Global Scenario

12. Structural Changes Major changes favoring emerging markets Volatile Energy Prices Shift to Asia Increased Globalization Industry Consolidation Talent Innovation Chemical Industry

13. Volatile Energy Prices Shift to cheaper feedstock and energy sources JVs and alliances as strategic move to access cheaper feedstock Development dollars going toward alternate energy sources Project delays and difficult financing Shifting consumer behavior $/bbl $/mmbtu 1 2 3 4 5 Proximity to markets – key advantage

14. Industry Consolidation More consolidation expected in developed economies Consolidation Shedding inefficient capacity Cutting costs Gain competitiveness through scale Gaining efficiencies Access to new markets 1 2 3 4 5

15. Changing Landscape Montecatini Edison Montedison Hercules Himont Shell Montell BASF Basell 1966 1983 Montedison 1987 1995 Hoechst Elenac Targor 1998 1997 1999 Access 2005 ARCO Equistar Milleneum 1995 Lyondell 2004 2002 Citgo Lyondell 2007 2007 BP Amoco Exxon Mobil Total Petro Fina Elf Atochem Chevron Phillips DOW Union Carbide Sabic 1998 1999 BP Amoco Exxon Mobil Total Fina TotalFinaElf 2000 2000 Chevron Phillips 1999 Dow 2002 2003 2006 Arkema Total Petchem BP Innovene Ineos 2004 2005 1998 2004 Sabic 2007 Tough Business Environment KPC JV 2007 DSM Scientific design Huntsman UK GE Plastics Chapter 11 Rohm & Haas ? Profits down 95% New Equations Huntsman Hexion Montecatini Edison Montedison Hercules Himont Shell Montell BASF Basell 1966 1983 Montedison 1987 1995 Hoechst Elenac Targor 1998 1997 1999 Access 2005 ARCO Equistar Milleneum 1995 Lyondell 2004 2002 Citgo Lyondell 2007 2007 BP Amoco Exxon Mobil Total Petro Fina Elf Atochem Chevron Phillips DOW Union Carbide Sabic 1998 1999 BP Amoco Exxon Mobil Total Fina TotalFinaElf 2000 2000 Chevron Phillips 1999 Dow 2002 2003 2006 Arkema Total Petchem BP Innovene Ineos 2004 2005 1998 2004 Sabic 2007 Tough Business Environment KPC JV 2007 DSM Scientific design Huntsman UK GE Plastics Chapter 11 Rohm & Haas New Equations Huntsman Hexion

17. Increase Globalization Global Competitiveness is Key Excellence in global supply chains becomes more critical Improvements needed in producer cost model to remain competitive Chemical giants in the Middle East, Russia, India and China are rising up 1 2 3 Information technology and communications have collapsed physical distances New competitors in every region  Companies located half-way around Past 10 Years  Global trade in chemicals  1.8x that of production

18. Innovation Cycles Inorganic chemicals Petrochemicals Bio-chemicals Nanotechnology Source:American Chemistry Council Birth Growth Maturity Birth Growth Maturity Research allocations for new areas Birth Growth Maturity Nano composites, Biocatalysts Polyethylene, PVC, Antibiotics, Catalysts Sulfuric Acid, Celluloid, Rayon, Dyes Product Examples Biomass, Microbes, Enzymes Petroleum, Natural Gas Coal Tar, Minerals Key Raw Materials Biotechnology, Alternative Energy, Nanotechnology, Electronic Chemicals Petrochemicals, Plastics, Specialties Dyes, Fertilizers, Acids, Inorganic Key Innovation Areas

19. Talent Outlook Wage inflation and high levels of turnover. Dwindling pool of high performing middle level managers  Gaps in leadership pipeline. Low attractiveness due to poor image of chemical industry for smart, young, skilled people. India  Talent pool for global chemical companies 1 2 3

20. Contents Structural Changes Indian Opportunity Conclusion Global Scenario

25. India – Trend in Chemical Trade Rising trend

26. Per Capita Consumption Vs GDP Polymers 1990-2013 India  Large Growth Potential

27. 2020 Requirements Large investments required 13.4 20.0 7.0 6.6 Olefins 9.7 15.5 4.2 5.8 Polyolefins 3.2 4.5 1.4 1.3 PVC 4.0 5.0 1.2 1.0 Glycol 5.6 8.3 2.2 2.6 Para-xylene 4.4 8.2 2.5 3.8 PTA 0.3 2.4 2020 Demand 0.2 0.2 0.5 PS 1.3 0.5 1.1 Benzene Capacity required 2009 Demand 2009 Capacity Chemical (mmta)

28. India – China Demand 2009 With Same Demography India is next growth hub for Chemicals

29. Contents Structural Changes Indian Opportunity Conclusion Global Scenario

30. Chemical Cluster Benchmarking PCPIR  Benchmark with leading chemical clusters Source : Kline and company study for Edmonton Cluster , Oct 2007 India Chemical hubs

31. India – Challenges Ahead Need to address these issues to support growth Imports from China due to shrinking market elsewhere for Chinese exporters Indian market offers one of the lowest tariff barriers in current economic slowdown Large Middle East capacities based on subsidized feed stock and low energy cost Compliance to environmental / safety related regulations like REACH 5% duty on Naphtha and Propane  Key building blocks for chemical industry Accelerated duty reduction  Below ASEAN levels for chemicals Indo – GCC and ASEAN FTAs 1 2 3 1 2 3 Global Domestic 4

32. Conclusion Chemicals trend Migration Consolidation Globalization Innovation Talent Cost Infrastructure Market Capital India can gainfully siege emerging global opportunity. Advantage Headwinds

33. Some things …. Never Change.

34. “ Rising aspiration of 85% of world mass is causing the shift to a more balanced world….. Enormous opportunity in growing prosperity of 5 Billion new consumers” Mukesh Ambani (Chairman & MD, Reliance Industries Ltd.)

35. Thank You