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Reliance press statement on CAG Report

Press Statement by Reliance Industries on September 08 2011


We have been given to understand that the Comptroller and Auditor General of India ( CAG ) has submitted its Final Audit Report on Hydrocarbon Production Sharing Contracts ( PSC ) including that of KG D6 Block for the years 2006*07 and 2007*08 to the Government of India and tabled in the Parliament. We are unable to comment on the contents as we have not yet seen the Final Audit Report.

We had already provided to Ministry of Petroleum and Natural Gas (MONPG), Directorate General of Hydrocarbon (DGH) & CAG out detailed comments along with views of international experts on such parts of the draft report that had been communicated to  us. We hope our detailed responses and the views of industry experts have been duly considered in finalising the Audit Report. We reiterate that, as a Contractor, we remain committed to complying with the PSC provisions and procedures including adopting Good International Petroleum Industry Practices ( GIPIP) in our operations.

Since many of the comments in the Draft Report had referred issues that were technical in nature,  we had offered to CAG a complete and through interaction with subject matter specialists. We remain open to such interaction at all times.

We maintain that in KG D6, RIL has set a global benchmark for effective, efficient project completion and capital cost competitiveness under the most trying circumstances and we are proud of our achievements.

We have and will continue to co-operate with the Government of India for audit as per the provisions of PSC.

About RIL
Reliance Industries Limited ( RIL ) is India's largest private sector company on all major parameters with a turnover of INR 2,58,651 crore ( US $ 58.0 billion ), cash profit of INR 34,530 crore ( US $ 7.7 billion ), net profit of INR 20,286 crore ( US $ 4.5 billion ) and net worth of INR 1,51,540 crore ( US $ 34.0 billion ) as of March 31, 2011.


RIL is the first private sector company from India to feature in the Fortune Global 500 list of ' Worlds Largest Corporations' and ranks 119th amongst the world's Top 200 companies in terms of profits. RIL ranks 68th in the Financial ' Times  FT Global 500' list of the world's largest companies. RIL is ranked amongst the '50 Most Innovative Companies-2010' in World in a survey conducted by the US financial publication - Business Week in collaboration with Boston Consulting Group ( BCG ). In 2010, BCG also ranked RIL as the second highest ' Sustainable Value Creators' for creating the most shareholder value over the decade in the world

India GDP Growth slows to 7.7% Year over Year

Estimates of Gross Domestic Product for the First Quarter (April-June) of 2011-12

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the estimates of Gross Domestic Product (GDP) for the first quarter (April-June) Q1, of 2011-12, both at constant (2004-05) and current prices, alongwith the corresponding quarterly estimates of expenditure components of the GDP. 2.         The estimates of Quarterly GDP have been compiled using the new series of Index of Industrial Production (IIP). The new series of IIP with base 2004-05 was released by CSO on 10th June, 2011.  The new series of IIP is based on a representative item basket comprising of 682 individual items and a weighting diagram which better reflects the present structure and composition of the industry due to changes in the technology, economic reforms and production behaviour over time. A comparative table showing growth rates of IIP in the new series and the old series for Q1 of 2009-10 to 2011-12 is given below.             Growth Rates of IIP in New and Old series for Q1 (In percentage) Mining Manufacturing Electricity Capital Goods Consumer Goods Old series New series Old series New series Old series New series Old series New series Old series New series 2009-10 6.8 6.2 3.6 -3.7 5.8 6.1 3.5 -16.5 -0.3 -1.6 2010-11 10.2 8.0 12.6 10.3 5.6 5.4 31.9 17.2 9.2 11.5 2011-12 1.0 7.5 8.2 16.8 4.2             Accordingly, Q1 estimates of  GDP for 2009-10 and 2010-11, which were released on 31st May 2011, have been revised on account of using the new series of IIP.  The use of new series of IIP (base 2004-05) has resulted in revisions in mining, manufacturing, electricity and trade, hotels and restaurant sectors in GDP. Estimates of Private Final Consumption Expenditure (PFCE), Gross Fixed Capital Formation (GFCF) and valuables, components of expenditure side of GDP have also been revised, accordingly. 3.         The details of estimates of GDP for Q1, 2011-12 are presented below. I           ESTIMATES OF GDP BY ECONOMIC ACTIVITY (a)        At constant (2004-2005) prices 4.         Quarterly GDP at factor cost at constant (2004-2005) prices for Q1 of 2011-12 is estimated at ` 12,26,339 crore, as against  `11,38,286 crore in Q1 of 2010-11, showing a growth rate of 7.7 per cent over the corresponding quarter of previous year.   5.         The economic activities which registered significant growth in Q1 of 2011-12 over Q1 of 2010-11 are  ‘electricity, gas & water supply’ at 7.9 per cent,  ‘trade, hotels, transport and communication’ at 12.8 per cent, ‘financing, insurance, real estate and business services’ at 9.1 per cent.  The estimated growth rates in other economic activities are: 7.2 per cent in ‘manufacturing’, 5.6 percent in ‘community, social and personal services’, 3.9 percent in ‘agriculture, forestry & fishing’, 1.8 percent in ‘mining & quarrying’ and 1.2 percent in ‘construction’ during this period. 6.         According to the information furnished by the Department of Agriculture and Cooperation (DAC), which has been used in compiling the estimate of GDP from agriculture in Q1 of 2011-12,  the production of crops - rice, wheat, coarse cereals and pulses during  the  Rabi  season  of agriculture year 2010-11 (which ended in June 2011) recorded growth rates of 11.3 per cent, 6.3 per cent, 0.7 per cent and 4.9 per cent, respectively over the production in the corresponding season of previous agriculture year.   Among the commercial crops, the production of oilseeds increased by 12.0 per cent during the Rabi season of 2010-11. 7.         According to the latest estimates available on the Index of Industrial Production (IIP) for the new series, the index of mining, manufacturing and electricity, registered growth rates of 1.0 per cent, 7.5 per cent and 8.2 per cent, respectively during Q1 of 2011-12, as compared to the growth rates of  8.0 per cent, 10.3 per cent and 5.4 per cent in these sectors during Q1 of 2010-11. The estimates of Q1 for 2009-10 and 2010-11 have been revised on account of using new series of IIP. 8.         The key indicators of construction sector, namely, production of cement declined by 0.9% and consumption of finished steel registered growth rate of 1.5 per cent, during Q1 of 2011-12. 9.         Among the services sectors, the key indicators of railways, namely, the net tonne kilometres and passenger kilometres have shown growth rates of 6.3 per cent and 6.1 per cent,  respectively during Q1 of 2011-12.  In the transport and communication sectors, the sales of commercial vehicles, cargo handled at major ports, cargo handled by the civil aviation, passengers handled by the civil aviation registered growth rates of 14.1 per cent, 5.2 per cent, 4.9 per cent and 14.6 per cent respectively during Q1 of 2011-12 over Q1 of 2010-11.  The total stock of telephone connections (including WLL and cellular) registered growth of 34 per cent as against 41 percent in the first quarter of the previous year.  The other key indicators, namely, aggregate bank deposits, and bank credits have shown growth rates of 18.7 per cent, and 21.0 per cent, respectively during Q1 of 2011-12 over Q1 of 2010-11. (b)       At current prices 10.       GDP at factor cost at current prices in Q1 of 2011-12, is estimated at ` 19,37,123 crore, as against ` 16,59,708 crore in Q1, 2010-11, showing an increase of 16.7 per cent.  11.       The wholesale price index (WPI), in respect of the groups, food articles, minerals, manufactured products, electricity and all commodities, has risen by 9.1 per cent, 20.9 per cent, 7.2 per cent, 0.3 per cent and 9.4 per cent, respectively during Q1 of 2011-12, over Q1 of 2010-11. The consumer price index for industrial workers (CPI-IW) has shown a rise of 8.9 per cent during Q1 of 2011-12 over Q1 of 2010-11. II         ESTIMATES OF EXPENDITURES ON GDP 12.       The components of expenditure on gross domestic product, namely, consumption expenditure and capital formation, are normally measured at market prices.  The aggregates presented in the following paragraphs, therefore, are in terms of market prices. Private Final Consumption Expenditure 13.       Private Final Consumption Expenditure (PFCE) at current prices is estimated at ` 11,97,461 crore in Q1 of 2011-12 as against `10,29,527 crore in Q1 of 2010-11.  At constant (2004-05) prices, the PFCE is estimated at ` 7,95,683 crore in Q1 of 2011-12 as against `7,48,395 crore in Q1 of 2010-11. In terms of GDP at market prices, the rates of PFCE at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 58.1 per cent and 60.5 per cent, respectively, as against the corresponding rates of 58.7 per cent and 61.7 per cent, respectively in Q1 of 2010-11. Government Final Consumption Expenditure 14.       Government Final Consumption Expenditure (GFCE) at current prices is estimated at ` 2,17,483 crore in Q1 of 2011-12 as against `1,95,413 crore in Q1 of 2010-11. At constant (2004-2005) prices, the GFCE is estimated at ` 1,36,935 crore in Q1 of 2011-12 as against `1,34,161 crore in Q1 of 2010-11. In terms of GDP at market prices, the rates of GFCE at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 10.5 per cent and 10.4 per cent, respectively, as against the corresponding rate of 11.1 per cent each in Q1 of 2010-11. Gross Fixed Capital Formation 15.       Gross Fixed Capital Formation (GFCF) at current prices is estimated at ` 5,85,261 crore in Q1 of 2011-12 as against ` 5,12,457 crore in Q1 of 2010-11. At constant (2004-2005) prices, the GFCF is estimated at ` 4,10,533 crore in Q1 of 2011-12 as against ` 3,80,544 crore in Q1 of 2010-11. In terms of GDP at market prices, the rates of GFCF at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 28.4 per cent and 31.2 per cent, respectively, as against the corresponding rates of 29.2 per cent and 31.4 per cent, respectively in Q1 of 2010-11. 16.       Estimates of GDP at factor cost by kind of economic activity and the Expenditures on GDP for Q1 of 2009-10, 2010-11 and 2011-12 at constant (2004-2005) and current prices, are given in Statements 1 to 4.

Indian Vehicle Sales Tumble

In a shocker that reveals how much the recent interest rate hike has bitten into car sales in India—the second fastest growing market for automobiles in the world—data for July this year shows a decline in sales for the first time in over 30 months.

Domestic passenger car sales have registered a 15.76% decline in July this year mainly due to hikes in lending rates and lower production by market leader Maruti Suzuki during the month.

Car sales in the country stood at 1,33,747 units in July, 2011, as against 1,58,767 units in the same month last year, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) today.

"This is the first time since January, 2009, that car sales have fallen. Interest rates and fuel prices were going up in recent months and that led to an overall negative sentiment in the market," SIAM Director General Vishnu Mathur told reporters.

The car market last witnessed a fall in January, 2009, when sales shrunk by 3.16% year-on-year. Last month's decline is the steepest since November, 2008, when car segment sales fell by 19.34%, he added.

The production loss at Maruti's Manesar facility due to preparations for the launch of its new Swift model and realignment of its DZiRE model's output also severely impacted sales, he said.

Earlier this month, Maruti Suzuki India (MSI) said that due to these two planned activities, sales in July were negatively impacted by nearly 17,000 units.

"There is no lack of demand, but just lack of conversion of demand into purchases by customers," Mathur said.

SIAM Senior Director Sugato Sen said non-availability of certain components like castings also impacted the output of many car-makers.

During the month, MSI India posted a 31.04% dip in domestic car sales to 52,483 units.

Rival Hyundai Motor India's sales were down by 11.49% to 25,501 units. Tata Motors saw a decline of 43.13% in sales to 13,997 units during the month.

When asked about the outlook, Mathur said: "Interest rates and fuel prices are challenges for the market. Hopefully, interest rates have reached their peak... If crude continues to soften, then there may be some positive impact as it will lead to inflation coming down."

The forthcoming festive season is also likely to help car-makers push sales, but to what extent it can boost growth has to be looked at, he added.

The auto industry has started slowing down this fiscal, with the passenger car segment growing by only 7% in May. In June, it saw its slowest growth rate in 27 months of 1.62%.

SIAM had last month revised the growth projection downward to 10-12% for 2011-12, as against its earlier forecast of 16-18%.

According to SIAM, two-wheeler sales increased by 12.61% in July, 2011, to 10,56,906 units from 9,38,514 units in July, 2010.

Motorcycle sales grew by 10.51 per cent during the month to 7,85,278 units from 7,10,621 units in the corresponding month last year.

Hero MotoCorp (formerly Hero Honda) continued its impressive performance with a 13.89% increase in sales to 4,43,948 units. Rival Bajaj Auto also posted a 5.30% increase in sales to 2,02,326 units during the month.

However, Honda Motorcycle and Scooter India (HMSI) saw its bike sales falling by 6.52% to 51,920 units. Chennai-based TVS Motor Co saw its motorcycle sales going up by 9.58% to 48,091 units during the month.

The scooter segment witnessed a growth of 23.03% in sales during July this year to 2,05,695 units from 1,67,195 units in the same month last year.

HMSI's scooter sales during the month were up 19.54% to 89,869 units, while that of TVS Motor Co grew by 20.47% to 46,324 units. Hero MotoCorp's scooter sales during the month grew by 36.29% to 33,766 units.

Three-wheeler sales during July, 2011, declined by 3.13% to 43,949 units from 45,369 in the same month last year.

Sales of commercial vehicles jumped by 23.70% to 64,241 units from 51,934 units in the year-ago period.

Light commercial vehicle sales grew by 35.95% to 37,111 units from 27,297 units last year. Medium and heavy commercial vehicle sales stood at 27,130 units as against 24,637 units in July last year, up 10.12%, SIAM said.

Total sales of vehicles across categories registered a growth of 8.99% to 13,48,753 units in July, compared to 12,37,521 units in the same month last year, it added.

ONGC/Indian Oil's Petrol/Diseel Price Riddle...

Ministry of Petroleum & Natural Gas09-August, 2011 17:52 IST

Production Costs of Petro-Products

The Minister for Petroleum & Natural Gas Shri S. Jaipal Reddy informed the Rajya Sabha in a written reply today that the cost of production by Oil and Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL) in the year 2010-11 is US$ 37.29 per barrel and US$ 27.76 per barrel respectively.   He also informed that the net crude oil price realized by ONGC and OIL during 2010-11 was US$ 38.35 per barrel and US$ 41.41 per barrel respectively.  The elements of sale price of crude oil per barrel during the financial year 2010-11 for ONGC and OIL are as under: Particulars US$ per barrel ONGC OIL Gross Price 89.41 89.53 Less: Discount 35.65 28.67 Net Price after discount 53.76 60.86 Less: Cess (including NCCD*, Education Cess) 8.25 8.06 Less: Royalty 5.45 9.07 Less: VAT &CST 1.71 2.32 Net Realized Price 38.35 41.41 *National Calamity Contingency Duty (NCCD) In reply to another query, the Minister added that refining is a process industry, where crude oil constitutes around 90% of the total cost. Crude oil is processed through several processing units such as Crude Distillation Unit (CDU), Vacuum Distillation Unit (VDU), Fluid Catalytic Cracking Unit (FCCU), Hydro Cracker Unit, Lube Unit etc. Each of these units produce intermediate product streams, which require extensive reprocessing and blending. Petroleum products are processed from blend of various intermediate streams. The blending of intermediate products streams from various units for making finished petroleum products results in difficulty in apportioning the total cost to individual refined products with accuracy. Therefore, individual product-wise costs are not identifiable separately.             Shri Reddy emphasised that, as mentioned above, the actual cost of production is not available separately for petrol and diesel. However, the oil marketing companies pay Refinery Gate price, when they purchase Petrol and Diesel from refineries. Refinery Gate price is based on Trade parity, which is the weighted average price of Import Parity Prices and Export Parity Prices in the ratio of 80:20.             Refinery Gate Price for Delhi as on 1.8.2011 is as under: Product RTP (Rs./ Ltr.) Petrol 35.39* Diesel 37.46            *As per the information received from Indian Oil Corporation Ltd.