Management Business Overview Analysis and description of all major business segments of Reliance covering brands, Discussion and strategic advantages and competitive strengths. The discussion structure covers the market environment the business operates in and how Reliance’s business model and operational Analysis excellence helped achieve a strong performance. Retail Digital Services Media and Entertainment Economic Context and Liquidity and Capital Operational Highlights Resources 42 122 Financial Performance Risk and Governance PG 50 PG 68 PG 82 and Review 124 52 Strategic Advantages and 70 Strategic Advantages and 84 Strategic Advantages and 46 Competitive Strengths Competitive Strengths Competitive Strengths Awards and Recognition 52 Performance Summary 70 Performance Summary 84 Performance Summary Business Overview 133 53 Operating Framework 71 Operating Framework 85 Operating Framework 54 Highlights FY 2020-21 72 Highlights FY 2020-21 86 Highlights FY 2020-21 50 56 Industry Overview 74 Industry Overview 88 Industry Overview 57 Performance Update 76 Performance Update 90 Performance Update 58 Business Performance 77 Business Performance 91 Business Performance 67 Outlook 81 Outlook 93 Outlook Oil to Chemicals Oil and Gas E&P PG 94 PG 112 96 Strategic Advantages and 114 Strategic Advantages and Forward-looking Statement Competitive Strengths Competitive Strengths The report contains forward-looking statements, identified by words like ‘plans’, ‘expects’, ‘will’, ‘anticipates’, ‘believes’, 96 Performance Summary 114 Performance Summary ‘intends’, ‘projects’, ‘estimates’ and so on. All statements that address expectations or projections about the future, but not 97 Operating Framework 115 Highlights FY 2020-21 limited to the Company’s strategy for growth, product development, market position, expenditures, and financial results, are 98 Highlights FY 2020-21 117 Industry Overview forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company 100 Industry Overview 118 Performance Update cannot guarantee that these are accurate or will be realised. The Company’s actual results, performance or achievements 103 Performance Update 118 Business Performance could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility to 104 Business Performance 121 Outlook publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. 109 Outlook The Company disclaims any obligation to update these forward-looking statements, except as may be required by law. CORPORATE MANAGEMENT GOVERNANCE FINANCIAL NOTICE Management Discussion and Analysis OVERVIEW REVIEW STATEMENTS Economic Context and Operational Highlights Overview Global The global economy contracted by roll out. The US fiscal stimulus has March 2021 and rail traffic also weak 3.3% in CY 2020, as all major economies further improved global oil demand at -28% y-o-y. Among other industrial barring China slipped into recession outlook. Global demand is expected indicators, electricity demand growth is with COVID-induced lockdowns. to grow 5.9 mb/d y-o-y in 2021 to now positive and GST collections have Advanced Economies’ (AE) decline average ~96.4 mb/d. remained robust at above `1 trillion of 4.7% was steeper than Emerging mark. Digital adoption saw acceleration The global economy is expected to see Markets (EM) decline of 2.2%. Within during the crisis, particularly in the a rebound in 2021 with the International the AE complex, the decline in Euro Area usage of digital payments. UPI Monetary Fund (IMF) expecting 6% (-6.6%) was much sharper than that in payments grew more than 100% y-o-y growth, with US stimulus and vaccine the US (-3.5%). Within the EMs, China’s in 2021 as monthly transaction volumes optimism leading to further opening up GDP grew 2.3%. Despite the steep crossed `4 trillion or nearly 25% of GDP of the economies. The growth recovery global decline in CY 2020, global on that run rate. is likely to be led by the US and China GDP decline was lower than initially – the US is estimated to grow 6.4% in The external sector exhibited resilience feared primarily due to unprecedented 2021 and China by 8.4%. Governments as current account turned surplus for monetary policy support from global and Central Banks are expected to the first time since 2004, on weaker central banks and fiscal stimulus from maintain supportive policies until domestic demand, falling oil prices and governments. Global fiscal stimulus the recovery is firmly underway. The strength in India’s services exports. reached ~US$18.6 trillion by March strength of recovery will depend on FDI and equity FII flows were strong, 2021 (23% of GDP) while monetary vaccine roll-out. driving India’s forex reserves to an all- stimulus by global central banks time high of ~US$580 billion by the end reached US$16.6 trillion (21% of GDP). India of FY 2020-21, against ~US$475 billion Global trade volume (goods and The Indian economy is estimated to by the end of FY 2019-20. Highlights and Key Events services) contracted by 9.6% in CY 2020 decline by 8% in FY 2020-21, the first The Reserve Bank of India (RBI), and the after a modest 1% increase in CY 2019. year of contraction since 1980. India’s central and state governments provided Global trade also started recovering economic decline was sharper than critical support to the economy during in 4Q FY 2021 as merchandise trade other key economies due to strict and During FY 2020-21, Reliance forged the crisis. The RBI maintained loose Jio Platforms and Reliance Retail, raised CAPITAL RAISED volume turned positive on y-o-y basis early lockdowns to control the spread defining strategic partnerships with monetary policy, cutting repo rates `152,056 crore and `47,265 crore from November 2020. Global trade is of COVID-19. However, growth has leading technology firms and marquee by 115 bps during early CY 2020. To respectively, from marquee global forecast to grow 8% in CY 2021 with continued to recover and was back investors across businesses. Through crore keep funding markets easy, the RBI investors including Facebook, Google, `2,60,074 merchandise volumes recovering faster in positive territory (+0.4%) in 3Q FY the Rights Issue and asset monetisation, maintained liquidity surplus through Silver Lake, Vista Equity Partners, than services volumes. 2021 after a decline of 24.4% and 7.3% Reliance executed the largest ever various monetary measures. General Atlantic, KKR, Mubadala, ADIA, Oil prices averaged US$43/bbl in 2020 respectively in 1Q FY 2021 and 2Q FY capital raise in India of `2,60,074 crore. India’s oil demand was down 9.1% TPG, L Catterton, PIF, Intel Capital and vs US$64/bbl in 2019 as COVID-19 led 2021. India saw a V-shaped recovery The fund raises along with capital y-o-y due to the unprecedented Qualcomm Ventures. to an unprecedented erosion in as most consumption and industrial commitments exceeded Net Debt indicators were back in positive growth demand shock during 1H FY 2021. levels, helping Reliance achieve a Net global oil demand. Global demand bp invested `7,629 crore for a 49% territory in the September-December While gasoline and diesel consumption Debt Free Balance sheet ahead of the averaged ~90.5 mb/d in 2020 (down stake in the fuel retailing business. quarter after being in deep negative in declined 6.8% y-o-y and 12% y-o-y stated timeline of March 2021. 9.5 mb/d y-o-y). Large production cuts The arrangement between RIL and bp the June quarter. Auto sales rebounded respectively, LPG registered positive by OPEC+ 9.7 mb/d in May-July and will build on RIL’s current fuel retailing from August 2020 onwards and both growth (+4.8% y-o-y) due to stay- 7.7 mb/d thereafter helped with a price network of 1,400 sites across India. two-wheeler and passenger vehicle at-home restrictions. With airlines RIL successfully completed floor in the face of the unprecedented The joint venture will aim to be a leader sales growth has been positive since remaining shut for most of the year, India’s largest ever Rights Issue demand shock. Global crude oil prices in mobility and low-carbon solutions, then. Travel indicators have remained and yet to resume full-scale operations, of `53,124 crore (oversubscribed have recovered in 2021 as economies bringing cleaner and affordable options weak – air traffic still at -37% y-o-y in jet fuel (ATF) consumption was by 1.59 times) - the world’s begin reopening amidst vaccine for Indian consumers with digital and down 53.7% y-o-y. largest by a Non-Financing technology being key enablers. Institution in the last ten years 42 Reliance Industries Limited Integrated Annual Report 2020-21 43 CORPORATE MANAGEMENT GOVERNANCE FINANCIAL NOTICE Management Discussion and Analysis Economic context and operational highlights OVERVIEW REVIEW STATEMENTS Highlights and Key Events Retail Digital Services Oil to Chemicals During the course of the year, the In Digital Services, Reliance Jio became Reliance has initiated the proceedings of Retail business omni-enabled its the first operator outside China to carving out its O2C businesses store network, strengthened digital achieve 400 million subscribers in into a separate subsidiary and the commerce platforms across the a single country market. Reliance process is expected to be completed in business and built capacities for Jio continues to revolutionise CY 2021. O2C reorganisation creates home deliveries. digitalisation in India with data an independent, global-scale growth consumption in excess of engine for RIL, with a strong cash flow Alongside, the business expanded its 5 Exabyte per month on its network. generation potential while facilitating partnerships with merchants across value creation through strategic the country under its inclusive New Strategic initiatives along with Facebook partnerships and attracting a dedicated Commerce model.