>RELIANCE INDUSTRIES LIMITED (MERRILL LYNCH)

■ Cautious optimism on refining recovery
Refining margin recovery seen in Jan 2010 (Singapore complex margins US$4.8/bbl vis-à-vis US$3/bbl in Apr-Dec 2009) may sustain. Two-thirds of the refining industry lost money in 2009. Consequent refinery closures and strong demand mainly from emerging markets would help the recovery. RIL, with its 2 complex refineries operating at high utilization rates, is well placed to benefit, in our opinion.

■ Update on KG D6 ramp-up and other key E&P issues
KG D6 gas may ramp up to peak in 2 quarters (our assumption), while KG D6 oil output may be 10-20k b/d in 2010E (22k b/d assumed in FY11E). The Supreme Court ruling in RNRL litigation may come in the next few weeks. Clarity on whether there will be a tax holiday on gas may take a long time, as it would to be decided by the courts.

■ Acquisition update
Canadian oil sand company Value Creations (VC) is unlikely to be acquired by RIL (recent press report of EoI), as the matter is closed now.

To read the full report: RIL