Reliance Ind. Ltd.

8/6/2019 Reliance Ind. Ltd.

1/83

An

Analytical Study

Of

Three years Published Data

Of

Reliance Industries Ltd.3rd Floor, Maker Chamber IV,

222, Nariman Point,Mumbai 400 021,

India.

2008-09

1


2/83

2


3/83

Company Profile

NO PARTICULAR Page.No.

1.

2.

3.

4.

5.

6.

7.

8.

Acknowledgement.

Preface.

Company Profile.

Brief Introduction.

Financial Highlights.

Result of Operations.

Finance Information.

Cash Profit.

Cash Flow Statement.

Ratio Analysis.

a) Profitability Ratio- Gross Profit Ratio.- Net Profit Ratio.- Return on Share Holders Fund.

- Return on Equity Share Holders Fund.- Earning per Share Ratio.- Dividend Per Share Ratio.- Operating Ratio.- Return on Capital Employed.- Expense Ratio.- Return on Equity Share Capital.- Price Earning Ratio.

3

4

7

9

11

12

13

15

16

21

24242628

3032343638404244

9.

10.

11.

12.

13.

14.

15.

16.

- Dividend Yield Ratio.- Interest Coverage Ratio.

b) Activity / Turnover Ratio.- Stock Turnover Ratio.- Debtors Turnover Ratio.- Creditors Ratio.- Overall Turnover Ratio.- Fixed Assets Turnover.

c) Liquidity Ratio.

- Current Ratio.- Liquid Ratio.- Quick / acid Test Ratio.

d) Leverage Ratio.- Debt-equity Ratio.- Proprietary Ratio.

e) Other.

- Long Term Funds to Fixed Assets.

Accounting Policies.

Notes on Accounts.

Directors Report.

Auditors Report.

Common-size Statements.- Profit & Loss Account.- Balance Sheet.

Bibliography.

Conclusion.

Suggestion.

4648

505052545658

60

606264

666668

70

70

72

74

75

77

7982

85

86

87

3


4/83

Company Name: - Reliance Industries Limited.

Address: - Reliance Industries Limited.

Dahej

Hazira

Jamnagar

Nagothane

Naroda

Patalganga

Vadodara

Registered Office: - 3rd Floor, Maker Chambers IV,

222, Nariman Point,

City: - Mumbai

Pin: - 400 021

Telephone:- +91 22 2278 5000

Fax: - +91 22 2278 5111

Email: - [email protected]

Website: - www.ril.com

Nature of Business: - Manufacturing

4


5/83

Chairman & M.D: - Mukesh D. Ambani

Board of Directors: - Nikhil R. Meswani

Hital R. Meswani

Hardev Singh Kohli

Ramniklal H. Ambani

Mansingh L. Bhakta

Yogendra P. Trivedi

Dr. Dharam Vir Kapur

Mahesh P. Modi

S. Venkitaramanan

Prof. Ashok Misra

Prof. Dipak C. Jain

Dr. Raghunath A. Mashelkar

Company Secretary: - Vinod M. Ambani

5


6/83

Brief Introduction

This companys name is RELIANCE INDUSTRIESLIMITED. Reliance Company was started by DHIRUBHAI AMBANI.He has started his business only just 15,000 Rs. As loan. And thandeveloped, and become big limited industries. Its business isexploration, manufacturing & retail. It has its own many brands ofvarious products. Its main business is manufacturing. RelianceIndustries is a Limited company. It has its own shares. RelianceIndustries Limited is one the biggest company in India as

manufacturing and exporting of many products. Its main business /brand as below:

Exploration & Production of Oil & Gas.

Polymers.

Chemicals.

Fiber Intermediates.

Polyester.

Textiles.

Retail.

Trevira.

Recron Malaysia.

GAPCO

6


7/83

Above are the main business / brands of the industries.These brands have their own Separate various small business / brands.

Reliance Industries Limited earned highest profit than otherindustries in India. Its last year gross profit is Rs.28, 935 crore ($7,212)and its net profit is Rs.19, 458 crore ($4,850).

Mukesh D. Ambani is a Chairman & Managing Director ofthe company. It is given regular dividend to the share-holders.

Business Review:

Oil & Gas Exploration & Production (E&P)

High commodity prices and robust demand for oil and gasresulted in the E&P industry experiencing a record year. One of themajor events in the industry was crude oil prices crossing an all timehigh of $ 100 /bbl. The energy demand was driven by secular globalgrowth. Supply chain pressures also led to price escalation.

Reliances ambition is to be a global energy major with asignificantly diversified upstream portfolio. The companys focus ontraining people, processes and technology is expected to help instrengthening its commitment towards exploration, development and

production activities.

7


8/83

Financial Highlights

Turnover: - Rs. 139,269 Crore (US$ 34,713 million)

Gross Profit: - Rs. 28,935 Crore (US$ 7,212 million)

Cash Profit: - Rs. 25,205 Crore (US$ 6,282 million)

Net Profit: - Rs. 19,458 Crore (US$ 4,850 million)

Net Profit 5 Years CAGR: - 30%

Total Assets: - Rs. 149,792 Crore (US$ 37,336 million)

Total Income: - Rs. 144,898 Crore (US$ 36,116 million)

EPS: - Rs. 133.9 (US$ 3.34)

8


9/83

Result of Operations

2007-08 Ratio(%)

2006-07 Ratio(%)

2005-06 Ratio(%)

GP 28,935 20.78 20,525 17.34 14,982 16.81

NP 19,458 13.97 11,943 10.09 9,069 10.18

EBIT 28,935 20,525 14,982

EBT 23,010 14,520 10,704

EAT 19,458 11,943 9,069

9


10/83

FINANCIAL INFORMATION

Introduction to Finance:-

Money occupies a key position in the capitalistic economies at the

modern ate. One at the most important function at the top management

is to raise finance at a right time and in a right quantity and also to use it

most effectively. In fact, this function constitutes the core at financial

management; this is evident from the fact that while all other function at

management can be and frequently are delegated to the other persons,

the power to take, and financial decisions is always reserved for tap-

management only.

"Financial management is an area of financial decision making,

harmonizing individual motives and enterprise goals"

Money is the life-blood at modern business. Money is required

To purchase expensive machinery, and day-to-day expenses on raw

Materials, labor, and operational and administrative needs at

Business, execution at expansion plans and modernization programs

Are not possible without adequate finance. Thus, money can be

Described as the lifeblood at industries. In the words at husband at

Dockeey, "Finance may be said to be the circulatory systems, at the

Economic body making possible the needed co-operation between

Many units of activity.

10


11/83

Importance of Finance in Modern World:-

Once the business is setup and earns profit the management has

to decide about allocation of earnings between payment to share holders

and retained earnings prudent management income calls from

comprehensive knowledge of finance principal and techniques.

Solution to these problems is rewarded to deliver

without knowledge of finance capital and money marketinvestors psychology and economics.

Finance helps business enterprise an management in getting

over their business problems and accomplishing their width

maximization good, knowledge of finance and its tools and techniques

provides strong and soled bases for making decision in all business

matters pertains to investment in the area of investment and

entrepreneur has to decides to what capital expenditures should the

enterprise make, what volume of funds should funds be allocated as

among different investment outlets.

Thus, finance is sign for business management. It is equally

useful for stockholder too who do not directly participate in

management of enterprise but are supposed to see that the management

is working in their best interest.

11


12/83

Importance of Cash profit:

The cash profit is an important measure of profitability aswell as liquidity when the cash profit differs from the profit shown in

the profit and loss account or profit of non cash expenses and incomes.The cash profit indicates the impact on non-cash Expenses & Incomes.The cash profit arrived at by adjusting depreciation, amortization ofcapital Expenses etc. The cash profit is much less or negative comparedto the profit declared in the profit and lass Account. It indicatesilliquidity and signals for appropriate Cash Management.

The Net Cash from operation can be calculated throughadjustment of Non-Cash items like depreciation, changes in inventory&receivables and payables and all items for which cash affects theinvesting and financing activities.

Cash Flow Statement

A Cash Flow Statement provides information that enablesusers to evaluate the changes in the assets of an enterprise, itsfinancial structure and its A Cash Flow Statement providesinformation that enables users to evaluate ability to affect theamounts and timing of cash flows in order to adapt to changingcircumstances. The Cash Flow Statement should report cash flowsduring the period classified by operating, investing and financialactivities.

12


13/83

CASH FLOW STATEMENT

(Rs. In crore)

(B) Cash flow from investing

activities:

Purchase of Fixed assets (19,111.22)Sale of Fixed assets 14.61

Purchase of Investment (70,090.07)

Sale of investment 69,116.24

Movement in Loans & Advances (4,496.00)

Interest received 592.99

Dividend income 18.37

(2) Net cash used for investing activities (23,955.08)

(C) Cash flow from financingactivities:Proceeds from Issue of Share Capital 0.04

Proceeds from Equity Share Warrants 1,682.40

Proceeds from Long Term Borrowings 10,769.61

Repayment of Long Term Borrowings (2,100.86)

Short Term Loans 528.25

Dividend Paid (including dividenddistribution tax)

-

Interest paid (1,906.40)

(3) Net cash from financing activities 8,973.04

Net Increase in Cash & Cash

Equivalents (1) + (2) + (3)

2,444.70

Opening Balance of Cash or Cash

Equivalents

1,835.35

Closing Balance of Cash or

Cash Equivalents

4,280.05

13


14/83

Interpretation of Cash Flow Statement :

The cash flow statement shows the inflow and out flows of thefund held by the fund. The cash flow statement is mainly divided in tothree parts they are cash flow from operating activities, cash flow frominvesting activities.

Operating activities are as follows:

The net profit before taxation from continuing operation andbefore exception items 23,010.14 crores is considered as if one takeprofit then he has add or deducted that incomes and expenses so itbecome complex and to avoid it this profit is taken into consideration.

The net prior year adjustments is 2.02 crores. And the diminutionin the value of investment is Rs. 13.92 crores.

The Fixed assets impairment is 1.79 crores, so that no changes incash flow statement and profit & loss account.

The depreciation of 6,627.85 crores in added in cash flowstatement as by depreciating assets the net profit in profit & lossAccount decrease but there is no changes in cash profit.

The Transferred from Revaluation Reserve is 1,780.71 crores andEffect of Exchange Rate Change is 398.62 and profit on sale of

investment is 118.87 crores.

The exceptional items income is 4,733.50 crores. Which is notfor the company because of the company have to get loss.

The interest income 662.40 crores will be deducted as it is addedfrom net profit in the profit & loss account.

14


15/83

The interest & finance expenses 1077.36 crores will be added asit is deducted from net profit &loss account.

This operating profit before change in working capital, nowbelow are the adjustments of working capital:

Trade & other receivables is Rs. 3930.18 crores. Increase ininventories by 2,111.03 crores means purchase of stock due to whichcash flow out of business so it is deducted.

Increase in Trade payables by 2,934.09 crores means expenses dieto which cash flow out of the business so it is added.

Total of cash generated from operations is Rs. 19,913.49 crores.

The tax paid of Rs. 2,484.73 crores are deducted from cash flowsout of business. It will be less in operating activities.

Net cash flow from operating activities is Rs. 17,426.74 crores.

The cash flow from investing activities as follows:

Purchase of fixed assets of Rs. 19,111.22 crores is deducted asdue to purchase the cash flow out of the firm.

Sale of fixed assets of Rs. 14.61 crores is added as due to sale ofcash flow come in firm.

Proceeds from purchase of Investment including investment insubsidiaries Rs. 70,090.07 crores is deducted due to increase ininvestment so cash flow out of the firm.

Sale of investment of Rs. 69,116.24 crores is deducted due todecrease in investment so cash flow out of firm.

Movement in loans & advances of Rs. 4,496.00 crores is deductedas due to decrease in the cash flow out of the firm.

15


16/83

Interest received of Rs. 592.99 crores and Dividend received is5.64 crores so it is not added in cash in cash outflow.

Net cash flow from investing activities is Rs. (23,955.08) crores.

The cash flow from financing activities are as follow:

Proceeds from Issue of Equity share capital Rs. 0.04 crores isadded as cash inflows of business.

Proceeds from equity share warrants of Rs. 1,682.40 crores isadded in cash flow in financing activities.

Proceeds of long term secured liabilities Rs. 10,769.61 crores isadded as cash flow in of business.

Repayment from Long term loans Rs. 2,100.86 crores isdeducted as cash flow out of business.

Interest paid of Rs. 1,906.40 crores is less in the cash as cash flowout of business.

Net cash flow from financing activities is Rs. 8,973.04 crores.

Net increase in cash and cash equivalents is Rs. 2,444.70 crores.

Opening cash and cash equivalents balance is Rs. 1,835.35 crores.

Gives us closing cash & cash equivalents balance is Rs. 4,280.05crores.

Thus, we could said that the company has many cash capital inthe business. It is capable for the purchasing & selling & give paymentto their expenses.

16


17/83

Ratio Analysis

Meaning:-

Financial statements, as prepared and presented annually areof little use for the guidance of prospective investors, creditors or evenmanagement. If relationships between various related items in these

financial statements are established, they can provide useful clue togauge accurately the financial health and ability of business to make

profit. This relationship between the two related items of financialstatements is known as ratio.

Importance:-

1. Thus a ratio is one number expressed in terms of another. It isa mathematical yardstick that measures the relationshipbetween two figures.

2. Ratio analysis is a process of comparison of one figure againstanother and the interpretation of the ratios to know thestrengths and weaknesses of the firms operations and of itsfinancial position.

3. Ratio analysis helps various interested parties like prospectiveinvestors, creditors, banks, employees etc. to draw usefulconclusions to serve their purpose.

4. The use of ratios is becoming increasing popular recently.

17


18/83

5. The banks used the current ratio to judge the capacity of theborrowing firm to repay the loan and to make regular interestpayments.

6. The suppliers of funds in the form of sharecapital would like to analysis the accounts to ascertain itsearning capacity and future prospects.

Classification:-

The ratios can be classified as follows:

(A) Traditional Classification

(B) Functional Classification

(A) Traditional Classification:

The ratios are grouped into three categories onthe basis of the financial statement from which the figures are takenfor computing the ratios. The ratios according to the classificationsare:

(1) Revenue Statement Ratios.

(2) Balance Sheet Ratios.

(3) Composite Ratios.

18


19/83

(B)Functional Classification:

Ratios are also grouped in accordance withcertain tests. On this basis there are four categories of ratios:

(1) Liquidity Ratios.

(2) Profitability Ratios:

(a) Gross Profit Ratio.(b) Net Profit Ratio.(c) Operating Ratio.(d) Return on Total Assets.(e) Return on Capital Employed.(f) Return on Shareholders Equity.(g) Return on Equity Share Capital.(h) Earning Per Share EPS.(i) Divided Per Share.

(j) Divided Pay-out Ratio.

(3) Leverage Ratios or Structural Ratios:

(a) Proprietary Ratio.(b) Debt-Equity Ratio.(c) Gearing Ratio.(d) Fixed Capital-Fixed Assets Ratio.(e) Coverage Ratio.

(4) Activity Ratio:

(a) Stock Turnover.(b) Debtors Ratio.(c) Current Assets Turnover.

19


20/83

(d) Fixed-Assets Turnover.(e) Total Assets Turnover

PROFITABILITY RATIO

Gross Profit Ratio: -

It is a ratio expressing the relationship betweengross profits earned to net sales. It is a useful indication of

profitability of business. This ratio is expressed inpercentage.

Formula: -

GROSS PROFIT RATIO = Gross Profit / Sales 100

Calculation: -

Year Gross Profit(Rs. In crores)

Sales(Rs. In crores)

Ratio

2007-08 28935 139269 20.78%

2006-07 20525 118354 17.34%2005-06 14982 89124 16.81%

20


21/83

Chart: -

Working Notes: -

(a) Gross profit = Net Sales + Closing Stock.

(b) Net Sales = Sales Other Income.

Interpretation: -

Gross profit ratio of the company for the three years hasincreased. 2007-2008 it was 20.78%, but in the 2006-2007 it wasdecreased by 17.34% and it was decreased by 16.81% in the year 2005-2006 so; it is good for the company.

21

20.78%

17.34%16.81%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Ratio

2007-08

2006-07

2005-06


22/83

Net Profit Ratio: -

Net profit is obtained interest and taxes are subtracting from thegross profit. The net profit margin ratio is measured by dividing profitafter tax by sales.

Net profit margin ratio establishes a relationship between netprofit and sales and indicates management efficiency in manufacturingadministering and selling the products. This ratio is over all measuredof the firms liability to tern each profit margin may decline due to fallin sales price or increase in the cost of production.

Formula: -

NET PROFIT = Net Profit / Sales 100

Calculation: -

Chart: -

Year Net profit(Rs. In crores)

Net sales(Rs. In crores)

Ratio

2007-08 19458 139269 13.97%

2006-07 11943 118354 10.09%

2005-06 9069 89124 10.18%

22


23/83

13.97%

10.09%10.18%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Ratio

2007-08

2006-07

2005-06

Working Notes: -

(A) Net profit = Gross profit (Deprecation financial expenses +

expenses + interest + tax + administration expenses + selling &distribution expenses.)

(B) Net sales = Sales Other income.

Interpretation: -

Net profit ratio of the company was for the year 2007-08 it was

13.97%, which was decreased by 10.09% in year 2006-07, & in 2005-06 it was increased by 10.18%, which is good for the company.

Return on Share Holders Fund: -

23


24/83

In order to judge the efficiency with which the proprietors fundsare employed in the business, this ratio is ascertained. Proprietorsequity or proprietors funds include share capital and reserves. It is ofgreat practical importance to the prospective investors, as it enables the

profitability of the company to be compared with that of the othercompany. It also indicates whether the return on proprietors funds isenough in relation to the risk that they undertake. This ratio shows whatamount of dividend is likely to be received on shares. Naturally whenreturn on shareholders fund is to be calculated, the profit should beafter interest and tax i.e. PAT Profit after Tax.

Formula: -RETURN ON SHARE HOLDERS FUND

= Profit/ Shareholders Fund 100

Calculation: -

Year Profit(Rs. In crores)

Share HoldersFund

(Rs. In crores)

Ratio

2007-08 19458 81449 23.89%

2006-07 11943 63967 18.67%

2005-06 9069 49804 18.21%

24


25/83

Chart:-

Working

Notes: -

(A) Profit = Profit after Tax (PAT).

(B) Share Holders Fund = Share Capital + Reserves.

Interpretation: -

Return on shareholders fund of the company was for the year2005-06 it was 18.21%, which was increased to 18.67% in year 2006-07, & in 2007-08 it was increased to 23.89%, which is good for thecompany.

25

23.89%

18.67%18.21%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Ratio

2007-08

2006-07

2005-06


26/83

Return on Equity shareholders fund: -

This ratio measures a relationship between net profit after interest& tax &preference dividend and equity share holders fund.

The objective of computing this ratio is to find out how efficientlythe funds supplied by the equity share holders have been used.

Formula: -

RETURN ON EQUITY SHARE HOLDERS FUND

= Profit- Preference dividend/ Shareholders Fund 100

Calculation: -


SHARE HOLDERSFUND

(Rs. In crores)

Ratio

2007-08 19458 81449 23.89%2006-07 11943 63967 18.67%

2005-06 9069 49804 18.21%

26


27/83

Chart: -

23.89%

18.67%18.21%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Ratio

2007-08

2006-07

2006-05

Working Notes: -

(A) Profit = Profit after Tax (PAT).

(B) Share Holders Fund = Share Capital + Reserves.

Interpretation: -

Return on equity shareholders fund of the company was for theyear 2005-06 it was 18.21%, which was increased to 18.67% in year2006-07, & in 2007-08 it was increased to 23.89%, which is good forthe company.

27


28/83

Earning Per Share Ratio: -

This ratio shows the profitability available to the equityshareholders on per share. This is the most important ratio from point ofview of outsiders. This ratio measures the net profit earned on per share.

Formula: -

EARNING PER SHARE RATIO

= PAT Pref. Share Dividend / No. Of Equity Share

Calculation: -

YEAR PAT(Rs.Incrores)

NO. OF EquityShares (Rs. In

crores)

Ratio(Rs.)

2007-08 19458 145.37 133.90

2006-07 11943 139.35 85.71

2005-06 9069 139.35 65.10

28


29/83

Chart: -

133.9

85.71

65.1

0

20

40

60

80

100

120

140

RATIO

2007-08

2006-07

2005-06

Working Notes: -

A) Profit after interest and tax preference share dividend

B) No. of equity share

Interpretation: -

Earning per share ratio of the company was for the year 2005-06it was 65.1 Rs, which was increased to in year 2006-07 it was 85.71 Rs,& in 2007-08 it was increased to 133.9 Rs, which is good for thecompany.

DIVIDEND PER SHARE:-

29


30/83

This ratio measures relationship between dividend pay to theshareholders and number of equity shares.

The objective of computing this ratio is to find out the net

distributed profit after interest & tax & preference share dividendbelong to equity share holder.

Formula: -

DIVIDEND PER SHARE =

= Dividend paid to Equity shareholders / No. of Equity shares

Calculation: -

YEAR Dividend(Rs. In crores)

NO. Of EquityShares (Rs. In

crores)

Ratio(Rs.)

2007-08 1631.24 145.37 11.22

2006-07 1440.44 139.35 10.34

2005-06 1393.51 139.35 10.00

30


31/83

Chart: -

11.22

10.34

10

9

9.5

10

10.5

11

11.5

RATIO

2007-08

2006-07

2005-06

Working Notes: -

(A) Dividend paid to equity shareholder

(B) No. of equity share

Interpretation: -

Dividend per share ratio of the company was for the year 2005-06it was 10.00 Rs, which was increased to in year 2006-07 it was 10.34Rs. & in 2007-08 it was increased to 10.00 Rs, which is good for thecompany.

31


32/83

Operating Ratio: -

It is a ratio showing relationship between cost goods sold plusoperating expenses and net sales. It shows the efficiency themanagement. The higher the ratio, the less will be the margin availableto proprietary. The ratio is also usually expressed as a percentage.

Formula: -

OPERATING RATIO

= Cost of Goods Sold + Operating Expenses / Sales 100

Calculation: -

Year Cost Of Goods Sold

(Rs. In crores)

OperatingExpenses

(Rs. Incrores)

Sales(Rs. Incrores)

Ratio( % )

2007-08 110334 8059.23 133443.00 82.67

2006-07 97829 7860.30 111692.72 82.152005-06 74142 7143.29 81211.33 82.58

32


33/83

Chart: -

82.67

82.15

82.58

81.8

82

82.2

82.4

82.6

82.8

Ratio

2007-08

2006-07

2005-06

Working Notes: -

(A) Cost of goods sold = Manufacturing expenses + Purchasesof trading goods + Selling & distribution- Exp.

(B) Operating Expenses = Financial Exp. + AdministrationExp. + Selling Exp.

(C) Net Sales = Sales Other income.

Interpretation: -

Operating ratio of the company was for the year 2005-06 it was82.58%, which was decreased to 82.15% in year 2006-07, & in 2007-08it was increased to 82.67%, which is good for the company.

33


34/83

Return on capital employed: -

It is an index of profitability of business and obtained bycomparing net profit with capital employed. The ratio is normallyexpressed in the percentage. The turn capital employed includes sharecapital, reserves and long learns such as debentures.

Formula: -

RETURN ON CAPITAL-EMPLOYED

= E.B.I.T / Capital employed * 100

Calculation: -

Year E.B.I.T(Rs. In crores)

CapitalEmployed (Rs. In

crores)

Ratio

2007-08 24088 58370.34 41.23%

2006-07 15710 40870.69 38.44%

2005-06 11581 32572.45 35.55%

34


35/83

Chart: -

41.23%

38.44%

35.55%

32.00%

34.00%

36.00%

38.00%

40.00%

42.00%

Ratio

2007-08

2006-07

2005-06

Working Notes: -

(a) Profit = Profit before Interest and Tax (PBIT).

(b) Capital Employed = Equity Share Capital + Preference Share

Capital + Reserve + Secured Loan.

Interpretation: -

Return on capital employed of the company was for the year2005-06 it was 35.55%, & which was increase to 38.44% in 2006-07 &in 2007-08 it was increased to 41.23%, which is good for the company.

35


36/83

Expense Ratio:-

This ratio shows that For the purpose of ascertainingrelationship between operating expenses and net sales, expenseratios are computed.

Formula: -

Expense ratio

= Expense / Sales * 100

Calculation: -

Chart: -

81.22%

82.06%

81.28%

80.80%

81.00%

81.20%

81.40%

81.60%

81.80%

82.00%

82.20%

RATIO

2007-08

2006-07

2005-06

YEAR Expense(Rs.In crores)

Sales(Rs. In crores)

Ratio(%)

2007-08 113117.13 139269 81.22

2006-07 97116.24 118354 82.06

2005-06 72444.34 89124 81.28

36


37/83

Working Notes: -

(A)Expenses

(B) Sales

Interpretation: -

Expense ratio of the company was for the year 2005-06 it was81.28%, which was decreased to in year 2006-07 it was 82.06%, & in

2007-08 it was increased to 81.22%, which is good for the company.

37


38/83

Return on Equity Share Capital : -

The ratio is important, as it indicates profitability of a firmfrom the viewpoint of real owners who are ordinary shareholders, who

bear all the risks of business. It signifies the success with which themanagement has been able to earn enough returns on funds supplied bythe proprietors.

Formula: -

RETURN ON EQUITY SHARE CAPITAL

= Profit- Preference dividend/ Equity Capital 100

Calculation: -


Equity Capital(Rs. In crores)

Ratio

2007-08 19458 1453.39 1338.80%

2006-07 11943 1393.00 857.36%

2005-06 9069 1393.00 651.04%

Chart: -

38


39/83

1338.80%

857.36%

651.04%

0.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

1400.00%

Ratio

2007-08

2006-07

2006-05

Working Notes: -

(A)Profit = Profit after Tax (PAT).

(B)Equity Share Capital

Interpretation: -

Return on equity shareholders fund of the company was for theyear 2005-06 it was 651.04%, which was increased to 857.36% in year

2006-07, & in 2007-08 it was increased to 1338.80%, which is good forthe company.

39


40/83

Price Earning Ratio: -

It is the above ratio with a slight change that it shows therelation between the market price of the share and the earning

per share.

Formula: -

PRICE EARNING RATIO

= Market Value per Share / Earning Per Share

Calculation: -

Chart: -

YEAR Market Value(Rs.In crores)

Earning per Share(Rs. In crores)

Ratio(times)

2007-08 2281 133.9 17.04

2006-07 1335 85.71 15.58

2005-06 912.73 65.27 13.98

40


41/83

17.0415.58

13.98

0

5

10

15

20

RATIO

2007-08

2006-07

2005-06

Working Notes: -

(A)Market Value per Share.

(B) Earning Per Share.

Interpretation: -

Price Earning ratio of the company was for the year 2005-06 itwas 13.98 time, which was increased to in year 2006-07 it was 15.58time, & in 2007-08 it was increased to 17.04 time, which is good for thecompany.

Dividend Yield Ratio:-

41


42/83

The dividend yield is calculated on the basis of marketvalue per share. It shows the actual return on the amount

invested by him.

Formula: -

DIVIDEND YIELD RATIO =

= DIVIDENDPERSHARE / MARKETVALUEPERSHARE

Calculation: -

Chart: -

YEAR Dividend per share

(Rs. In crores)

Market value(Rs. In crores)

Ratio(Rs.)

2007-08 11.22 2281 0.005

2006-07 10.34 1335 0.008

2005-06 10.00 912.73 0.011

42


43/83

0.005

0.008

0.011

0

0.002

0.004

0.006

0.008

0.01

0.012

RATIO

2007-08

2006-07

2005-06

Working Notes: -

(A) Dividend per share.

(B) Market value per share.

Interpretation: -

Dividend yield ratio of the company was for the year 2005-06 itwas 0.011 Rs, which was increased to in year 2006-07 it was 0.008 Rs.& in 2007-08 it was increased to 0.005 Rs, which is good for the

company.

Interest Coverage Ratio:-

43


44/83

The ratio indicates as to how many times the profit coversthe payment of interest on debentures and long-term loans. Hence, it isknows as times-interest earned ratio. It is indicated in times.

Formula: -

Interest Coverage Ratio

= Earning before Depreciation, Interest and Tax / Interest

Calculation: -

Year E.B.D.I.T(Rs. In crores)

Interest(Rs. In crores)

Ratio(Times)

2007-08 28935 1077.36 26.86

2006-07 20525 1188.89 17.26

2005-06 14982 877.04 17.08

Chart: -

44


45/83

26.86

17.26 17.08

0

5

10

15

20

25

30

RATIO

2007-08

2006-07

2005-06

Working Notes: -

(a) Gross profit (EBDIT) = Net Sales + Closing Stock.

(b) Interest.

Interpretation: -

Interest coverage ratio of the company for the three years hasincreased. 2007-2008 it was 26.86times, but in the 2006-2007 it wasdecreased by 17.26times and it was quit decreased by 17.08times in theyear 2005-2006 so; it is good for the company.

Activity / Turnover Ratio

45


46/83

STOCK TURNOVER RATIO: -

The number of times the average stock is turn over during theyear is known as stock turn over. It is computed by dividing the cost ofgoods sold by the average stock.

The objective of computing this ratio is to determine theefficiency with which the inventory is utilized.

Formula: -

STOCK TURNOVER RATIO

= Cost of goods sold / Average stock

Calculation: -

Year C.O.G.S. AverageStock

Ratio(times)

2007-08 110334 13192.03 8.36

2006-07 97829 11128.17 8.79

2005-06 74142 10119.82 7.33

Chart: -

46


47/83

8.36

8.79

7.33

6.50

7.00

7.50

8.00

8.50

9.00

Ratio

2007-08

2006-07

2005-06

Working notes: -

(A) cost of goods sold = sales gross profit

(B) average stock = opening stock +closing stock / 2

Interpretation: -

Stock turnover ratio of the company was for the year 2005-06 itwas 7.33times, which was increased to in year 2006-07 it was 8.79, &in 2007-08 it was decreased to 8.36, which is not good for the company.

47


48/83

DEBTORS TURNOVER RATIO : -

The debtors turnover suggest the number of times the amount ofcredit sales is collected during the year, while debtor ratio indicates thenumber of days during which the dues for credit sales are collected.Suppose the debtors ratio is sixty days, it means that debtors pay theirdues for credit sales after sixty days of making the sales.

Formula: -

Debtors Turnover Ratio

= Credit Sales / Average Debtors.

Calculation: -

Year Credit Sales

(Rs.In crores)

Avg.Debtors

(Rs.In crores)

Ratio

(days)2007-08 1,33,443.00 4980.00 27

2006-07 1,11,692.72 3948.02 28

2005-06 81,211.33 4163.62 20

Chart:-

48


49/83

2728

20

0

5

10

15

20

25

30

Ratio

2007-08

2006-07

2005-06

Working notes: -

(A) Credit sales (net sales)

(B) Average Debtors

Interpretation: -

The debtors turnover ratio during 2005-06 was 20 days, whichincrease to 28 days in 2006-07.and decreased to 27 days in 2007-08.Less credit facility is good for the company.

49


50/83

CREDITORS RATIO : -

The creditors turnover suggest the number of times the amountof credit purchase is collected during the year, while creditors ratioindicates the number of days during which the dues for credit purchasesare collected. Suppose the creditors ratio is sixty days, it means thatcreditors pay their dues for credit purchases after sixty days of makingthe purchase.

Formula: -

CREDITORS TURN OVER RATIO

= Creditors + Bill Payable /Avg. Daily Purchase

Calculation: -

Year Creditors +B/P.(Rs.In crores)

Avg. DailyPurchase

(Rs.In crores)

Ratio(days)

2007-08 20590.45 6007.71 125

2006-07 16467.24 1821.28 90

2005-06 12166.87 2516.13 48

50


51/83

Chart: -

125

90

48

0

20

40

60

80

100

120

140

Ratio

2007-08

2006-07

2005-06

Working notes: -

(A) Sundry creditors+ bills payable

(B) Avg. Daily Purchase

Interpretation: -

The credit payment period during 2005-06 was 48 days, which

increased to 90 days in 2006-07 and increased to 125 days in 2007-08.More credit facility is not good for the company.

51


52/83

Overall Turnover Ratio: -

It is an index of Profitability of business and obtained bycomparing net sales with capital employed. The ratio is normallyexpressed in the times. The turn capital employed includes sharecapital, reserves and long learns such as debentures.

Formula: -

Overall Turnover Ratio

= Net Sales / Capital employed

Calculation: -

Chart: -

Year E.B.I.T(Rs. In crores)

CapitalEmployed (Rs. In

crores)

Ratio

2007-08 133443.00 58370.34 2.29

2006-07 111692.72 40870.69 2.73

2005-06 81211.33 32572.45 2.49

52


53/83

2.29

2.73

2.49

2

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

RATIO

2007-08

2006-07

2005-06

Working Notes: -

(a) Net Sales = Sales Excise Duty or Service Tax Recovered

(b) Capital Employed = Equity Share Capital + Preference Share

Capital + Reserve + Secured Loan.

Interpretation: -

Overall Turnover Ratio of the company was for the year2005-06 it was 2.49, & which was increase to 2.73 in 2006-07 & in2007-08 it was decreased to 2.29, which is not good for the company.

53


54/83

Fixed Assets Turnover: -

To ascertain the efficiency and profitability of business, the totalfixed assets are compared to sales. The more sales in relation to theamount invested in fixed assets, the more efficiency is the use of fixedassets.

Formula: -

FIXED ASSETS TURNOVER

= Sales / Total Fixed Assets

Calculation: -

Year Sales(Rs.In crores)

Total FixedAssets

(Rs.In crores)

Ratio

2007-08 139269 84889 1.64

2006-07 118354 71189 1.66

2005-06 89124 62675 1.42

Chart: -

54


55/83

1.641.66

1.42

1.30

1.40

1.50

1.60

1.70

Ratio

2007-08

2006-07

2005-06

Working notes: -

(A) sales

(B) total fixed assets

Interpretation: -

Fixed assets turnover ratio in year 2005-06 it was 1.42 & it isincreasing in 2006-07 it was 1.66. It was decreasing in 2007-08 it was1.64 so, it isnt good for the company.

LIQUIDITY RATIO

55


56/83

Current ratio:

Current ratio indicates the current position. Current ratioobtained by dividing current assets by the current liabilities. Currentassets includes cash and those assets which can be converted in to cashwith in a year such as marketable securities, debtors and inventories,short term bank loans, income tax liability and long debt maturing inthe current year.

The current ratio is a measure of the firms short-termsolvency.

Formula: -

CURRENTRATIO = Current Assets / Current Liabilities

Calculation: -

Chart: -

Year Current Assets(Rs. In crores) Current Liabilities(Rs. In crores) Ratio(2:1)

2007-08 24827.71 21045.47 1.18:1

2006-07 17707.35 16865.53 1.05:1

2005-06 16454.66 12563.50 1.31:1

56


57/83

1.18

1.05

1.31

0

0.2

0.4

0.6

0.8

1

1.2

1.4

RATIO

2007-08

2006-07

2005-06

Working notes: -

(A) Current assets = Cash & Bank balance, stock + Debtors +Bills receivable + Short term investment +

Prepaid expenses + Loan & Advances.

(B) Current Liabilities = Liabilities & Provision.

Interpretation: -

Liquidity ratio of the company was for the year 2005 - 06 it was

1.31, which was decreased to in year 2006-07 it was 1.05, & in 2007 08 it was increased to 1.18, which isnt so good for the company. Butcompany should try to increased its current assets toward the currentliabilities.

Liquid ratio: -

57


58/83

A variant of current ratio is the liquid ratio, which is designed toshow the amount of cash available to meet immediate payments. It isobtained by dividing liquid assets by liquid liabilities. Sometimesaccountants do not prefer to include bank overdraft in current liabilitieson the argument that it is generally a permanent way of conservation itis always good to include bank overdraft. Stock is excluded from thelist of quick current assets because they are not expected to beconverted into cash. In the liquid ratio the absolute figures of the threeyear.

Formula: -

LIQUID RATIO = Liquid Assets / Liquid Liabilities

Calculation: -

Year Liquid Assets(Rs.In crores)

Liquid Liabilities(Rs. In crores)

Ratio(1:1)

2007-08 10580.17 21045.47 0.50:1

2006-07 5570.84 16865.53 0.33:1

2005-06 6334.84 12563.50 0.50:1

Chart: -

58


59/83

0.5

0.33

0.5

0

0.1

0.2

0.3

0.4

0.5

Ratio

2007-08

2006-07

2005-06

Working notes: -

(A) Liquid Assets = Current Assets Stock.

(B) Liquid Liabilities = Current Liabilities Bank Overdraft.

Interpretation: -

Liquid ratio of the company was for the year 2005-06 it was 0.50,which was decreased to in year 2006-07 it was 0.33, & in 2007-08 itwas increased to 0.50, which isnt so good for the company. But thecompany should try to increased liquid assets and decreased liquid

liabilities.

59


60/83

Quick / Acid test Ratio: -

To remove the defect of current ratio, liquid ratio is used. Itis a variant of current which is designed to show the amount of funds

available to meet immediate payment.

Formula: -

Quick / acid test Ratio= Quick Assets / Liquid Liability

Calculation: -

Year Quick Assets(Rs.In crores)

Liquid Liabilities(Rs. In crores)

Ratio(0.5:1)

2007-08 4280.05 21045.47 0.20:1

2006-07 1835.35 16865.53 0.11:1

2005-06 2146.16 12563.50 0.17:1

Chart: -0.2

0.11

0.17

0

0.05

0.1

0.15

0.2

Ratio

2007-08

2006-07

2005-06

Working notes: -

60


61/83

(A) Quick Assets.

(B) Liquid Liabilities = Current Liabilities Bank Overdraft.

Interpretation: -

Quick test Ratio of the company was for the year 2005-06 itwas 0.17, which was decreased to in year 2006-07 it was 0.11, & in2007-08 it was increased to 0.20, which is good for the company. Thecompany should try to get more profit.

LEVERAGE RATIO

61


62/83

Debt-equity Ratio: -

This ratio expresses the relationship of long-termliabilities to net worth. Long-term debts are those, which arerepayable after one year and this are other that those appearingunder Current Liabilities include debentures and other securedand unsecured loans which are repayable after one year on theother hand, if the debt is at lower level improvement in theearning on net worth is possible, provided the growth plans are to

be funded from untapped borrowings. The other expect of highdebt is that case of a full in sales.

Formula: -

DEBT-EQUITY RATIO

= Long term fund / proprietors Fund 100

Calculation: -

Year Long Termfund

(Rs.In crores)

ProprietorsFund

(Rs.In crores)

Ratio

2007-08 366.52 81448.60 0.45:1

2006-07 281.46 63967.13 0.44:1

2005-06 219.14 49804.00 0.44:1

Chart: -

62

0.45

0.44 0.44

0.44

0.44

0.45

0.45

Ratio

2007-08

2006-07

2005-06


63/83

Working Notes: -

(A) Long Term Funds = Loans and Advances.

(B) Proprietors Funds = Share capital + Reserves.

Interpretation: -

Debt equity ratio of the company was for the year 2005-06 it was0.44, which was same in year 2006-07 it was 0.44, & in 2007-08 it wasincreased to 0.45, which is good for the company.

Proprietary ratio: -

The ratio shows the proportion of proprietors funds to the totalassets employed in the business.The proprietors fund or share-holders

63


64/83

equity surplus. The ratio indicates the amount of capital contributed bythe proprietors .The higher the ratio, the higher proprietors & thefinancial position of business.

Formula: -

PROPRIETORY RATIO

= Proprietors Funds / Total Assets 100

Calculation: -

Year ProprietorsFunds

(Rs.In crores)

Total Assets(Rs.In crores)

Ratio

2007-08 81449 149792 54.37%

2006-07 63967 117353 54.51%

2005-06 49804 93095 53.50%

64


65/83

Chart: -

54.37%54.51%

53.50%

52.50%

53.00%

53.50%

54.00%

54.50%

55.00%

Ratio

2007-08

2006-07

2005-06

Working Notes: -

(A) Proprietors Fund = Share Capital + Reserves.

(B) Total Assets = Fixed Assets + Current Assets.

Interpretation: -

Proprietors ratio of the company was for the year 2005-06 it was53.50%, which was increased to in year 2006-07 it was 54.51%, & in2007-08 it was decreased to 54.37%, which is not good for thecompany.

65


66/83

Others

Long Term Funds to Fixed Assets: -

The fixed assets should always be acquired out of long-termfunds meaning there by that this ratio should not be less then 100.

Formula: -

Long term fund to fixed assets ratio

= Long Term Fund / Fixed assets * 100

Calculation: -

Year Long TermFund

(Rs.In crores)

Fixed assets(Rs.In crores)

Ratio( % )

2007-08 116245.88 84889.47 136.94

2006-07 91732.72 71188.59 128.86

2005-06 17669.87 62674.54 114.35

66


67/83

Chart: -

136.94

128.86

114.35

100

105

110

115

120

125

130

135

140

Ratio

2007-08

2006-07

2005-06

Working notes: -

(A) long term funds = Eq. Share capital + Reserve surplus +Secured loans + Unsecured Loans

(B) fixed asset

Interpretation: -

Long term funds to fixed asset ratio of the company was for theyear 2005-06 it was 114.35%, which was increased to in year 2006-07 itwas 128.86 %, & in 2007-08 it was increased to 136.94 %, which is

good for the company.

67


68/83

Significant Accounting Policies

A. Basis of Preparation of Financial Statements:

The financial statement are prepared in under the historicalcost convention, except for certain fixed assets which are revalued, inaccordance with the generally accepted accounting principles in Indiaand the provision of the companies act, 1956.

B. Use of Estimates:

The preparation of financial statements requires estimatesand assumption to be made that affect the reported amount of assets andliabilities on the date of financial statements and the reported amount ofrevenues and expenses during the reporting period.

C. Own Fixed Assets:

Fixed assets are stated at cost net of value added tax andinclude amounts added on revaluation, less accumulated depreciationand impairment loss.

D. Depreciation:

Depreciation on fixed assets is provided on written down

value method at the rates and in the manner prescribed in schedule tothe companies act, 1956 over their useful life except.

68


69/83

E. Borrowing Costs:

Borrowing costs that are attributable to the acquisition ofqualifying assets are capitalized as part of the cost of such assets.

F. Provision for Current and Deferred Tax:

Provision for current tax is made after taking intoconsideration benefits admissible under the provisions of the incometax act, 1961.

G. Premium on Redemption of Bonds/ Debentures:

Premium on redemption of bonds / debentures, net of taximpact, are adjusted against the Securities Premium Account.

H. Foreign Currency Transactions:

Transactions denominated in foreign currencies arerecorded at the exchange rate prevailing on the date of transaction.

Non monetary foreign currency items are carried at cost.

69


70/83

Notes on Accounts

1. The previous years figures have been reworked,regrouped, rearranged and reclassified wherever necessary.Amounts and other disclosures for the preceding year areincluded as an integral part of current year financialstatements and are to be read in relation to the amountsand other disclosures relating to the currentyear.

2. As per Accounting Standard 15 Employee Benefits,the disclosures of employee benefits as defined in the accountingstandard.

The companys provident fund is exempted under section17 of employees provident fund act, 1952.

3. The employees gratuity fund scheme managed by atrust is a defined benefit plan.

70


71/83

Directors Report

Financial ResultsThe financial performance of the Company for the financial year ended

March 31, 2008 is summarized below: (Rs. In crore)

PARTICULERS 2007-2008

Profit before Depreciation,

Interest & Tax28,934.64

Less: Interest 1,077.36

Depreciation 6,627.85

Less: Transfer from Revaluation &Reserve

1,780.71

4,847.14

Profit before Tax 23,010.14

Less: Provision for Current Taxation 2,604.96

Provision for Fringe Benefit Tax 47.00

Provision for Deferred Tax 899.89

Profit after Tax 19,458.29

Add: Balance in P & L A/C 2,765.37

Excess provision for tax for earlier years 48.10

Amount Available for Appropriation 22,271.76

Appropriations:

General Reserve 16,000.00Dividend on Equity Shares 1,631.24

Tax on dividend 277.23

Balance carried to Balance Sheet 4,363.29

22,271.76

71


72/83

1. Result of Operations:

During the year, the Company has scaled new heights

and set several new benchmarks in terms of sales, profits, net

worth and assets.

2. Dividend:

Your Directors have recommended a dividend ofRs. 13/- per Equity Share for the financial year endedMarch 31, 2008, amounting to Rs. 1,631 crore thehighest ever payout by private sector company in

India.

3. Credit Rating:

The Company has the highest domestic creditratings of AAA from CRISIL and Fitch.

4. Employees Stock Option Scheme:

Members approval was obtained at the AnnualGeneral Meeting held on June 27, 2006 for introductionof Employees Stock Option Scheme.

72


73/83

Auditors Reports

Name of the Auditors:

1) Chaturvedi & Shah.

2) Deloitte, Haskins & Sells.

3) Rajendra & Co.

To the members of the Company:

A) They have audited the attached balance sheet of

Reliance Industries Ltd. As at March 31st 2008, the

profit and loss account and also the Cash Flow

Statement for the year ended on that date annexed

there to.

B) As required by the Companies order 2003 issued by

the Central Govt. of India in terms of sub-section

(4A) of section 227 of the Companies Act, 1956.

C) Their directors recommend the re-appointment of

Chaturvedi & Shah, Deloitte Haskins & Sells and

Rajendra & Co. as Chartered Accountants as joint

auditors of your company.

73


74/83

D.Chaturvedi A.Siddharth A.R.Shah

Partner Partner Partner

Membership No.:5611 Membership No.:31467 Membership No.:47166

For and on behalf of the Board

Mukesh D. Ambani

Chairman & M.D

74


75/83

Common-size Profit & Loss Account

Interpretation of Common-size P & L A/c

PARTICULARS

2007-08 2006-07 2005-06

(in crores) (%) (in crores) (%) (in crores) (%)

INCOME

Turnover 1,39,269.46 100 1,18,353.71 100 89,124.46 100(-) Excise Duty/Service TaxRecovered 5,826.46 4.18 6,660.99 5.63 7,913.13 8.88

Other Income 5,628.79 4.04 478.28 0.40 682.92 0.77

Variation in Stocks (1,867.16) 1.34 654.60 0.55 2,131.19 2.39

1,37,204.63 98.52 1,12,825.60 95.33 84,025.44 94.28

EXPENDITURE

Purchases 6,007.71 4.31 1,821.28 1.54 2,516.13 2.82

Interest and Finance Charges 1,077.36 0.77 1,188.89 1.00 877.04 0.98

Manufacturing & Other Exp. 1,02,262.28 73.43 90,479.81 76.45 66,527.30 74.65

Depreciation 6,627.85 4.76 6,812.16 5.76 4,853.73 5.45Less: Transferred fromRevaluation Reserve 1,780.71 1.28 1,997.01 1.69 1,452.73 1.63

4,847.14 3.48 4,815.15 4.07 3,400.91 3.82

1,14,194.49 82.00 98,305.13 83.06 73,321.38 82.27

PROFIT BEFORE TAX 23,010.14 16.52 14,520.47 12.27 10,704.06 12.01

Provision for Current Tax 2,604.96 1.87 6.87 0.006 3.83 0.004Provision for Fringe Benefit

Tax 47.00 0.04 45.42 0.04 45.53 0.05

Provision for Deferred Tex 899.89 0.65 919.63 0.78 704.00 0.79

PROFIT AFTER TAX 19,458.29 13.97 11,943.40 10.09 9,069.34 10.18

75


76/83

Interpretation of common-size statement of P&L A/c is that totalincome of year 2005-06 is Rs. 84,025.44 crore (94.28%). In year 2006-

07 it was increase to Rs. 1,12,825.60 crore (95.33%). In year 2007-08 itwas also increase to Rs. 1,37,204.63 crore (98.52%).

Total turnover of the year 2005-06 is Rs. 89,124.46 crore andyear 2006-07 it was increase to Rs. 1,18,353.71 crore it was alsoincrease to 1,39,269.46 crore in the year 2007-08. all the three yearsturnover total percentage is 100%.

Less Excise duty / service tax recovered in the turnover in year

2005-06 it was Rs. 7,913.13 crore (8.88%). It was decrease to Rs.6,660.99 crore (5.63%) in year 2006-07. in the year 2007-08 it wasdecrease to Rs. 5,826.46 crore (4.18%). It isnt good for a company.

Add. Other income in a year 2005-06 it was 682.92 crore(0.77%). It was decrease to 478.28 crore (0.40%) in 2006-07. in year2007-08 it was increase to Rs. 5,628.79 crore (4.04%). It is very goodfor a company. And also Add. Variation in stocks in year 2005-06 itwas Rs. 2,131.19 crore (2.39%). It was decrease to Rs. 654.60 crore

(0.55%) in year 2006-07. in year 2007-08 it was loss to Rs. 1,867.16crore (1.34%). It is loss for the company.

Interpretation of the common-size statement of P&L A/cExpenditure of the year 2005-06 is Rs. 73,321.38 crore (82.27%) inyear 2006-07 it was increase to Rs. 98,305.13 crore (83.06%) and year2007-08 it was increase to Rs. 1,14,194.49 core (82.00%). It is good fora company as percentage.

Total purchase of the year 2005-06 is 2,516.13 crore (2.82%). Itwas decrease to Rs. 1,821.28 crore in year 2006-07. in year 2007-08 itwas increase to Rs. 6,007.71 crore (4.31%).It is better for the company.

Interest and finance charges are in year 2005-06 it was 877.04crore (0.98%). In year 2006-07 it was increase to Rs. 1,188.89 crore

76


77/83

(1.00%). In year 2007-08 it was decrease to Rs. 1,077.36 crore (0.77%).It not good for company.

Manufacturing & other expenses are in year 2005-06 it was

66,527.30 crore (74.65%). In year 2006-07 it was increase to Rs.90,479.81 crore (76.45%) and year 2007-08 it was Rs. 1,02,262.28crore (73.43%). It is not good for company.

Net Depreciation of year 2005-06 is 3,400.91 crore (3.82%). Itwas increase in the year 2006-07 with 4,815.15 crore (4.07%). In year2007-08 it was increase to Rs. 4,847.14 crore (3.48%). It is better forthe company.

Profit after tax is in year 2005-06 it was 10,704.06 crore(12.01%). It was increase to Rs. 14,520.47 crore (12.27%) in year 2007-06. in year 2007-08 it was increase to Rs. 23,010.14 crore (16.52%). Itis good for company.

In the taxes has including provision of current tax, Provision offringe benefit tax and provision of deferred tax. All are increase in year2007-08 to compare the previews years. It is good for the company.

Profit after tax in year 2005-06 it was Rs. 9,069.34 crore(10.18%). In year 2006-07 it was increase to Rs. 11,943.40 crore(10.09%). It was also increase Rs. 19,458.29 crore (13.97%) in year2007-08. it very good for company.

Thus we can say that the company is profitable company. Andits management is very good because of the earning biggest profit andgave the dividend to their share holders. Therefore companysemployees, workers, managers, shareholders ect are satisfied to the

company.

77


78/83

Common-size Balance Sheet As on 31stMarch

PARTICULERS As at 31.03.2008 As at 31.03.2007 As at 31.03.2006

(in crores) (%) (in crores) (%) (in crores) (%)

(A)SOURCES OF FUNDS

Share holders funds

(a) Share capital 1,453.39 1.15 1,393.21 1.41 1,393.17 1.81

(b) Equity Share Suspense - - 60.14 0.06 - -

(c) Equity Share Warrants 1,682.40 1.34 - - - -

(d) Reserve & surplus 78,312.81 62.25 62,513.78 63.29 48,411.09 63.17

81,448.60 64.74 63,967.13 64.76 49,804.26 64.98

Loan funds

(a) Secured loan 6,600.17 5.25 9,569.12 9.69 7,664.90 10.00

(b) Unsecured loan 29,879.51 23.75 18,256.61 18.48 14,200.71 18.53

36,479.68 29.00 27,825.73 28.17 21,865.61 28.53

Deferred tax liabilities 7,872.54 6.26 6,982.02 7.07 4,970.82 6.49

TOTAL 1,25,800.82 100.00 98,774.88 100.00 76,640.69 100.00

(B) APPLICATION OF FUNDS

Fixed Assets

(a) Gross Block 1,04,229.10 82.85 99,532.77 100.77 84,970.13 110.87

(b) (-) Depreciation 42,345.47 33.66 35,872.31 36.32 29,253.38 38.17

Net Block 61,883.63 49.19 63,660.46 64.45 55,716.75 72.70

(c) Capital work in progress 23,005.84 18.29 7,528.13 7.62 6,957.79 9.08

84,889.4767.48

71,188.59 72.07 62,674.54 81.78

Investment 22,063.60 17.54 16,251.34 16.45 5,846.18 7.63

Current Assets, Loans & Adv.

Current Assets

Inventories 14,247.54 11.33 12,136.51 12.29 10,119.82 13.20

Sundry Debtor 6,227.58 4.95 3,732.42 3.78 4,163.62 5.43

Cash & Bank Balance 4,280.05 3.40 1,835.35 1.86 2,146.16 2.80

Other Current Assets 72.54 0.06 3.07 0.003 25.06 0.0324,827.71 19.74 17,707.35 17.92 16,454.66 21.47

Loans & Advances 18,058.13 14.35 12,206.00 12.36 8,119.79 10.59

42,885.84 34.09 29,913.35 30.38 24,574.45 32.06

(-) Current Liabilities &

Provisions

(a) Current Liabilities 21,045.47 16.73 16,865.53 17.07 12,563.50 16.39

(b) Provisions 2,992.62 2.38 1,712.87 1.73 3,890.98 5.08

24,038.09 19.11 18,578.87 18.80 16,454.48 21.47

NET CURRENT ASSETS 18,847.75 14.98 11,334.95 11.48 8,119.97 10.59

TOTAL 1,25,800.82 100.00 98,774.88 100.00 76,640.69 100.00

78


79/83

Interpretation of Common-size Balance

Sheet

Interpretation of common-size statement of balance sheet is thattotal sources of funds in year 2005-06 it was Rs. 76,640.69 crore, inyear 2006-07 it was increase to Rs. 98,774.88 crore and it was alsoincrease to Rs. 1,25,800.82 crore in year 2007-08.

All the three years source of funds percentage is 100%. In year2005-06 share holders funds was Rs. 49,804.26 crore (64.98%), it wasincrease to Rs. 63,967.13 crore (64.76%) in year 2006-07. in year 2007-08 it was also increase to Rs. 81,448.60 crore ( 64.74%). It is good forthe company. In the share holders funds has included share capital,Equity share suspense, equity share warrants and reserve & surplus.They are all increase in year 2007-08 to compare the previous years. Itis very good for company.

Total loan funds of the company in year 2005-06 it was Rs.21,865.61 crore (28.53%), it was increase to Rs. 27,825.73 crore(28.17%) in year 2007-06. in year 2007-08 it was increase to Rs.

36,479.68 crore (29.00%). It is good for company. In the loan funds hasincluded two items like secured loan and unsecured loan. It alsoincrease compare to the previous years for year 2007-08.

Deferred tax liabilities in year 2005-06 it was Rs. 4,970.82 crore(6.49%), in year 2006-07 it was increase to Rs. 6,982.02 crore (7.07%).It was also increase to Rs. 7,872.54 crore (6.26%) in year 2007-08. it isgood for company.

Total application of funds is balance with the source of funds. Inyear 2005-06 fixed assets of the company is Rs. 62,674.54 crore(81.78%). It was increase to Rs. 81,188.59 crore (72.07%) in year 2006-07. in year 2007-08 it was also increase to Rs. 84,889.47 crore(67.48%). It is very good for company. In the fixed assets has includedgross block, net depreciation and capital work in progress. All are

79


80/83

increases in year 2007-08 compared to the previous two years. It isgood for company.

Total investment of the company is in year 2005-06 is Rs.

5,846.18 crore (7.63%). It was increase to Rs. 16,251.34 crore (16.45%)in year 2006-07. in year 2007-08 it was increase to Rs. 22,063.60 crore(17.54%). It is good for the company.

In year 2005-06 total current assets, loans and advances is in year2005-06 it was Rs. 34,574.45 crore (23.06%). In year 2006-07 it wasincrease to Rs. 29,913.35 crore (30.38%) and it was also increase to Rs.42,885.84 crore (34.09%) in year 2007-08. it is good for the company.

In year 2005-06 current assets is Rs. 16,454.66 crore (21.47%). Inyear 2006-07 it was increase to Rs. 17,707.35 crore (17.92%). In year2007-08 it was also increase to Rs. 24,827.71 crore (19.74%). It is verygood for company. In current assets has included inventories, cash &

bank balance and other current assets.

Less: current liabilities & provisions in the current assets. In year2005-06 current liabilities is Rs. 16,454.48 crore (21.47%). It wasincrease to Rs. 18,578.87 crore (18.80%) in year 2006-07. in year 2007-

08 it was also increase to Rs. 24,038.09 crore (19.11). it is good forcompany.

Net current assets in year 2005-06 it is Rs. 8,119.97 crore(10.59%). In year 2006-07 it was increase to Rs. 11,334.95 crore(11.48%). It was also increase to Rs. 18,847.75 crore (14.98%) in year2007-08. it is good for company. Thus we can say that company isearned more profit. And prepared a balance sheet as per rules &regulation therefore both the side balance are equal.

80


81/83

BIBLIOGRAPHY

BOOKS & MATERIALS :-

1. Annual Report of Reliance Industries Limited.

2. Financial Management

- M.Y. Khan, P.K. Jain

3. B.S. Shah

WEB-SITES :-

1. www.yahoo.co.in

2. www.google.co.in

3. www.ril.com

81
http://www.yahoo.co.in/http://www.google.co.in/http://www.ril.com/http://www.google.co.in/http://www.ril.com/http://www.yahoo.co.in/


82/83

CONCLUSION

(1) Profitability Ratio:

The gross profit ratio of the year 2005-06 is 16.81% but the netprofit of the company is 10.18% & expenses ratio is 81.28%, which isgrater of three years. In 2006-07 gross profit is 17.34% and net profit is10.09% and expenses ratio is 82.06% in which ratio is to be decreases.In 2007-08 gross profit is 20.78% and net profit is 13.97% hereexpenses ratio is 81.22% as this increase the net profit increases and wecan see it.

(2) Turnover Ratio:

In 2005-06 debtors turnover is 20 days. In 2006-07 debtorsturnover is 28 days. In 2007-08 debtors turnover is 27 days. So debtorsare paid regularly and no delay in payment.

(3) Liquidity Ratio:

In year 2005-06 current ratio is 1.31:1 & liquid ratio is 0.50:1

which says that the cash is not available for the payments isdissatisfactory. In year 2006-07 current ratio is 1.05:1 & liquid ratio is0.33:1 which says that the cash is available for the payments issatisfactory as compared to previous year. In year 2007-08 current ratiois 1.18:1 & liquid ratio is 0.50:1. So we can conclude that the ability ofthe company to make payment is satisfactory but it is reducing in rate.

The solvency ratio in the year2007-08 are high than the past year.This shows the good and satisfactory position of the company in this

year.

As per this finance report I conclude that the company is doingexcellent and is strong in every in field. I am very thankful to get a

project Reliance Industries Ltd. and definitely prove benefits thisproject.

82


83/83

Suggestion

Reliance Industries limited is a growing company and allover performance of the company is satisfactory level. The mainperformance of the company can be judged by the Net profit ratio andthis ratio going to increase in every year. The Expenses ratio is alsodecrease, so company can get the more profit and also to give moredividend to the share holders.

Net worth of company is increasing, so the position o the

company is better condition in the future. The market value of the shareof all the three years it was in upward direction. The performance ofliquid ratio is not good, so company can improve in these factors.

Date post:	07-Apr-2018
Category:	Documents
Upload:	dhartip1
View:	219 times
Download:	0 times

Reliance Ind. Ltd.

Documents