S&P reaffirms 'BBB' rating on RIL post IPCL merger move

SINGAPORE, March 29, 2007 - Standard & Poor's Ratings Services said today it affirmed its long-term foreign and local currency ratings on India's Reliance Industries Ltd. (Reliance) at 'BBB', following the approval by Reliance's board of directors of the proposed merger with Indian Petrochemicals Corp. Ltd. (IPCL). The outlook is stable.

"We expect the combined entity to benefit from greater market dominance and higher integration, and to maintain a relatively strong financial profile. As the merger is a cashless transaction involving a swap of shares, it will not have any negative impact on Reliance's financial profile," said Standard & Poor's credit analyst Anshukant Taneja.

The ratings on Reliance continue to factor in the likelihood of timely completion of its ongoing projects, specifically the new refinery at Jamnagar, India. "The ratings are also underpinned by the expectation that Reliance will pursue its noncore businesses, particularly investments in the retail sector, following a modular plan, as an accelerated

investment strategy may weigh on the company's overall credit profile," Mr. Taneja added.

Reliance is India's largest private sector company. Its two main lines of business are oil refining and petrochemicals production, accounting for about 67% and 31% of revenues, respectively, for the nine months ended December 2006. For the same period, Reliance had revenues of Indian rupee (INR) 834 billion (US$19 billion) and net income from

continuing operations of INR80 billion.

IPCL, presently 46%-owned by Reliance, is the second-largest petrochemicals producer in India. For the nine months ended December 2006, IPCL reported sales of INR91 billion and net income from continuing operations of INR10 billion.