FULL INDEPTH ANALYSIS OF RIL-RNRL CASE AND IMPACT OF KG BASIN ON ECONOMY

1. KG Basin Gas Dispute & NTPC Group Colleagues: Nisha Barot 08 Manisha Choithani 13 Suchita Hotchandani 24 Rati Motwani 38 Dimpi Sanghavi 50

2. KG Basin

15. Court Verdicts Bombay High Court Ordered RIL to supply the gas as per the original statement The Bombay High Court allowed Reliance Industries to sell gas from KG basin at the government-approved price of USD 4.20 per mmBtu as an interim measure, while reserving judgment on a case brought by RNRL

18. RIL’s Capital Expenditure Under the PSC, RIL first gets to recover its capital and operating costs out of whatever revenues get generated; it is only after this that the government get a share in the profit – this share rises as RIL’s revenue to cost ratio rises If its capital expenditure goes up, the government’s profit fall The DGH says the capital expenditure has been verified by independent experts including the CAG (Comptroller & Auditor General of India) – the CAG’s report, however, has not been made public

19. ESTIMATED COST OF PRDN OF KG BASIN Sr.No Particulars Amt (in mn) 1 G & G Studies 34.67 2 Reservoir and Completion Studies 22.66 3 Development Wells 1164.58 4 Prdn Facilities 13.82 5 Eco-Protection 4.3 6 Administration 20.5 7 IT 9.46 8 Kakinada Captive Berth 54.96 9 Owned Support,Intervention Vessel and Helicopter 150 5196.58

20. RIL’s Calculations* Post-Well Expenditure Cost ($/MMBTU) RIL’s development Exp. (Capex) in KG 0.54118 Production (Operating) Exp. 0.2211 Interest Cost 0.1316 Total post-well exp. 0.8945 Pre-Well Expenditure Cost ($/MMBTU) Exploratory Exp. (Capex) 0.144 Production Exp. (10% of Capex*) 0.170 Total pre-well Exp. 0.314 Royalty @ 5% on margin ($4.2-$0.314) 0.02 TOTAL NET COST OF PRODUCTION 1.43

22. At sales price of $2.34 Even at a sales price of $2.34/mmbtu, RIL maintains a profit margin of a little over 60%

25. IMPACT ON SHARE PRICES OF RIL AND RNRL DUE TO JUDGEMENT

37. CONCLUSION

38. THANK YOU