CHAPTER I

INTRODUCTION

Reliance Industries Limited (RIL) (BSE: 500325, NSE: RELIANCE, LSE: RIGD) is an Indian

conglomerate company headquartered in Mumbai, Maharashtra, India. The company operates

through three business segments: petrochemicals, refining, and oil and gas, other divisions of the

company include textiles, retail business, special economic zone (SEZ) development and

telecom/broadband business. RIL is one of the largest publicly traded company in India by

market capitalization and is the second largest company in India by revenue after Indian Oil

Corporation. It is also India's largest private sector company by revenue and profit. The company

is ranked 99th on Fortune Global 500 list of the world's biggest corporations for the year 2012.

1

Reliance Industries

Type Public

Traded as BSE: 500325,NSE: RELIANCE,LSE: RIGD

BSE SENSEX Constituent

CNX Nifty Constituent

Industry Conglomerate

Predecessors Reliance Commercial Corporation

Founded 1966

Founders Dhirubhai Ambani

Headquarters Mumbai, Maharashtra, India

Area served Worldwide

Key people Mukesh Ambani

(Chairman and MD)

Products Crude oil, natural

gas,petrochemicals, petroleum,polyester, textiles, retail,telecom, media

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Revenue  US$ 75 billion (2014)

Operating

income

 US$ 7.14 billion (2013)

Profit  US$ 3.86 billion (2013)

Total assets  US$ 58.67 billion (2013)

Total equity  US$ 31.66 billion (2013)

Employees 23,519 (2013)

Website www.ril.com

Stock

According to the company website "1 out of every 4 investors in India is Reliance

shareholder."Reliance has more than 3 million shareholder, making it one of the world's most

widely held stock. Reliance Industries ltd. Subsequent to its split in Jan. 2006 has continued to

grow. Reliance Company has been among the best company performing in the Indian Stock

Market.

Products

Though the company's petrochemicals, refining, and oil and gas-related operations form the

incore of its business, other dividors of the company include cloth, retail business and special

economic zone (SEZ) development. Reliance Retail has entered into the fresh foods market as

Reliance Fresh.

RIL is to invest $10 billion over the next few years in its new aerospace division which will

design, develop, manufacture, equipment and components, including airframe, engine, radars-

avionics and accessories for military and civilian aircraft. helicopters, unmanned airborne

vehicles and aerostats. It had applied for industrial license in early July 2012. This decision

comes after the creation of Reliance Aerospace Technologies 11rt Ltd and Reliance Security

Solutions Ltd.

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It has a wide range of products from petroleum products, petrochemicals, to garments, reliance

retail has entered into the fresh food market as Reliance Fresh and launched a new chain called

Delight Reliance Retail and NOVA chemicals have signed a letter of intent to make energy

efficient structures. The primary business of the company is petroleum refining and

petrochemicals. It operates a33 million tone refinery at Jamnagar in the Indian state of Gujarat.

Reliance has also completed a second refinery of 29 million tones at the same site which started

operation in December 2008.The Company is also involved in oil and gas exploration and

production. In 2002, it stuck a major find on India’s eastern coast in the Krishna Godavari basin.

Gas production from this find was started on April 22009. As of the end of third quarter of

20A9-10, gas production from the KG D6 ramped up to 60 MMSCMD.

4

CHAPTER II

Product Flow Chart

5

RIL’s Growth Story

Fiscal 2AA4 will go down as a record year in the history of Reliance Industries. The company's

net profits crossed the $1 billion mark. Over the last 25 years, RIL has seen its sales growth from

Rs.120 crore (Rs 1.2 billion) to Rs 74,418 crore (Rs 744.18 billion). Net profits during the period

grew at a compounded annual growth rate of 26 per cent to Rs 5,160 crore (Rs 51.6 billion). This

remarkable performance was reflected in the stock markets too shares of Reliance gave a return

of 39 per cent on an annualized basis.

Figuring among the top 150 companies globally in terms of net profit and among the top 450 in

terms of sales, Reliance's past performance has been admirable. But what is even more surprising

is that even now the company is not showing any signs of sluggishness. While announcing the

annual results for fiscal 2004, vice-chairman and managing director Anil Ambani said the

company would continue to grow at the rate of 20 per cent over the next five years -- that is

almost double the country's expected economic growth rate. Since RIL accounts for 12 percent

of the Sensex's market-cap and one out of four investors in Indian equities is a Reliance

shareholder, RIL's future performance is significant for the overall market performance. And

today in 2ilt,?its turnover is Rs.339,792 Cr. lt RIL contributes 14%of India's total Export .7.8%

weightage in the NSE Nifty, 5.5% of the government of India's indirect tax revenues ,9.3%

weightage in the BSE Sensex ,4% of total capitalization in India.

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Mission & Vision

Continuously innovate to remain Farmers in human progress by Hamessing science &

technology in the petrochemicals domain.

Our mission

Be a Globally preferred Business associate with response to concern for ecology, society, &

Shareholders value.

Values and quality policy your values

Integrity respect to peoples, unity of purpose, outside-in Focus, Agility and innovation

Quality policy

"Bare committee to meet customers' requirements through continual improvement of our quality

image system. We shall sustain organizational excellence through visionary leadership and

innovative efforts.

MITESTONES

Staring of as a small textile company, Reliance has in its journey crossed several milestones to

become a fortune 500 companies in less than 30 decades. Reliance continues to cross newer and

bigger miles in its quest for what is known as “Growth of Life”.

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AWARDS

RIL believe in GROWTH THROUGH RECOGNITION

Leadership

Shri Mukesh Ambani, Chairman & Managing Director, RIL has been nominated to a 'key

advocacy group of Millennium Development Goals', whose mandate includes finding ways to

fight socio-economic evils such as poverty, by the United Nations in 2010. Shri Ambani is the

only Indian to be a part of the MDG Advocacy Group that comprises eminent international

personalities.

Shri Mukesh Ambani has been re-elected as Vice Chairman of the Business Council for

Sustainable Development’s (WBCSD) Executive Committee or a second consecutive term in

2010.

The Foundation Board of World Economic Forum (WEF) elected Shri Mukesh Ambani on its

Board. WEF's mission is to improve the stats of &e world and the elected board members make

valuable contributions to this mission through their involvement.

Shri Mukesh Ambani received prestigious “ Dwight D Eisenhower Global Leadership Award' at

the Business Council for International Understanding's Annual Global Awards Gala in 2010.

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Corporate Ranking & Ratings:

RIL continues to be featured, for the sixth consecutive year, in the Fortune Global 500 list of the

Worlds Largest Corporations, ranking for 2010 is as follows:

Ranked 175 based on Revenues

Ranked 100 based on Profits

RIL has been ranked at 20th position, on the basis of sales, in the ICIS Top 100 Chemicals

Companies list. RIL is the only Indian company in the world's Top 20 chemical companies in the

global ranking. RIL had also been named as 8th biggest gainer in the list in terms of operating

profits. RIL is the only Indian company to get a perfect score from CLSA Asia-Pacific Markets

(CLSA) in a list of Asia's best companies in terms of CSR and termed the Company as the

region's 'Corporate Good Guy'. In its Ethical Asia' 2010 report, CLSA has named RIL among its

top picks for providing very- good data and going well beyond required disclosure. RIL is rated

as the 33rd most innovative Company in the World in a survey conducted by the US financial

publication- Business Week in collaboration with the Boston Consulting Group (BCG). Further,

in 2010, BCG has ranked RIL second amongst the world's 10 biggest 'Sustainable Value

Creators', companies for creating the most shareholder value for the period 2000 to 2009.

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Project Management

E&P Division received the Petrotech-2010 Special Technical Award in the Project Management'

category for completion of their Krishna Godavari Gas project ahead of schedule.

Health, Safety and Environment

Allahabad Manufacturing Division received a rating of 90% for its environmental

initiatives from British Safety Council in 2010.

Barabanki Manufacturing Division received '5 Star Rating on BSC Environment' from

British Safety Council in 2010.

Dahej Manufacturing Division received 'Greentech Environment Excellence Award 2010

Dahej Manufacturing Division received the National Award for the Prevention of

Pollution in Petrochemicals Sector' for its excellence in environment practices from the

Ministry of Environment & Forests, Government of India " in 2010.

Dahej Manufacturing Division received Our Cup of Joy Indies Best Practices on Water

Confederation of Indian Industry (CII) October 2010.

RIL have got many such awards in different categories such as Technology, patents,

R&D and Innovation, Retail.

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Commitments of Reliance Industries

Reliance believes that any business conduct can be ethical only when it rests on the nine Core

values of Honesty, Integrity, Respect, Fairness, Purposefulness, Trust, Responsibility,

Citizenship and Caring.

The essence of these commitments is that each employee conducts the company’s business with

integrity, in compliance with applicable laws, and in a manner that excludes considerations of

personal advantage.

We do not lose sight of these values under any circumstances, regardless of the goals we have to

achieve. To us, the means are as important as the ends.

We care about:

Quality

Research & Development

Health- Safety & Environment

Human Resource Development

Energy Conservation

Corporate citizenship

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CHAPTER III

Reliance lndustries LimitedComparative Balance Sheet as at 31st March 2012 and

31stMarch 2011

Mar '12 (Amt in Cr.) Mar '11 (Amt in Cr.)

Sources Of FundsTotal Share Capital 3,271.00 3,273.37Equity Share Capital 3,271.00 3,273.37Share Application Money

0 0

Preference Share Capital 0 0Reserves 1,59,698.00 1,42,799.95Revaluation Reserves 3,127.00 5,467.00Net worth 1,66,096.00 1,51,540.32Secured Loans 6,969.00 10,571.21Unsecured Loans 51,658.00 56,825.47Total Debt 58,627.00 67,396.68Total Liabilities 2,24,723.00 2,18,937.00

Application Of FundsGross Block 2,09,552.00 2,21,251.97Less: Accum. Depreciation

91,770.00 78,545.50

Net Block 1,17,782.00 1,42,706.47Capital Work in Progress

4,885.00 12,819.56

Investments 54,008.00 37,651.54Inventories 35,955.00 29,825.38Sundry Debtors 18,424.00 17,441.94Cash and Bank Balance 889 604.57Total Current Assets 55,268.00 47,871.89Loans and Advances 24,573.00 17,320.60Fixed Deposits 38,709.00 26,530.29Total CA, Loans & Advances

1,18,550.00 91,722.78

Deferred Credit 0 0

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Current Liabilities 66,244.00 61,399.87Provisions 4,258.00 4,563.48Total CL & Provisions 70,502.00 65,963.35Net Current Assets 48,048.00 25,759.43Miscellaneous Expenses 0 0

Total Assets2,24,723.00 2,18,937.00

Contingent Liabilities 45,831.00 41,825.13Book Value (Rs) 498.21 446.25

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Reliance Industries Limited

Cash Flow Statement for the year ended 31st March, 2012 and 31st March, 2011

Mar '12 (Amt

in Cr.)

Mar '11 (Amt

in Cr.)

Net Profit Before Tax 25750 25242.24

Net Cash From Operating Activities 26974 33280.52

Net Cash (used in)/from -3046 -20332.88

Investing Activities

Net Cash (used in)/from Financing Activities -11465 724.57

Net (decrease)/increase In Cash and Cash

Equivalents12463 13672.21

Opening Cash & Cash Equivalents 27135 13462.65

Closing Cash & Cash Equivalents 39598 27134.86

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Reliance Industries Limited

Statement of Profit and Loss for the year ended 31st March, 2012 and 31st March, 2011

Mar '12

(Amt in Cr.)

Mar '11

(Amt in Cr.)

Income

Sales Turnover 3,39,792.00 2,58,651.15

Excise Duty 9,860.00 10,515.09

Net Sales 3,29,932.00 2,48,136.06

Other Income 5,981.00 3,358.61

Stock Adjustments 872 3,243.05

Total Income 3,36,785.00 2,54,737.72

Expenditure

Raw Materials 2,79,737.00 1,98,076.21

Power & Fuel Cost 4,094.00 2,255.07

Employee Cost 2,857.00 2,621.59

Other Manufacturing Expenses 2,557.00 2,915.44

Selling and Admin Expenses 7,510.00 7,207.83

Miscellaneous Expenses 255 500.52

Preoperative Exp Capitalised -37 -30.26

Total Expenses 2,96,973.00 2,13,546.40

Operating Profit 33,831.00 37,832.71

PBDIT 39,812.00 41,191.32

Interest 2,668.00 2,328.30

PBDT 37,144.00 38,863.02

Depreciation 11,394.00 13,607.58

Other Written Off 0 0

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Profit Before Tax 25,750.00 25,255.44

Extra-ordinary items 0 0

PBT (Post Extra-ord Items) 25,750.00 25,255.44

Tax 5,710.00 4,969.14

Reported Net Profit 20,040.00 20,286.30

Total Value Addition 17,236.00 15,470.19

Preference Dividend 0 0

Equity Dividend 2,531.00 2,384.99

Corporate Dividend Tax 410 386.9

Per share data (annualised)

Shares in issue (lakhs) 32,710.59 32,733.74

Earning Per Share (Rs) 61.26 61.97

Equity Dividend (%) 85 80

Book Value (Rs) 498.21 446.25

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CHAPTER IV

Comparative accounting policies

A. Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, except for certain

fixed assets which are revalue, in accordance with the generally accepted accounting principles

in India and the provisions of the Companies Act, 1956.

B. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect

the reported amount of assets and liabilities on the date of the financial statements and the

reported amount of revenues and expenses during the reporting period. Difference between the

actual results and estimates are recognised in the period in which the results are know/

materialised.

C. Own Fixed Assets

Fixed Assets are stated at cost net of recoverable taxes and includes amounts added on

revaluation, less accumulated depreciation and impairment loss, if any. All costs, including

financing costs till commencement of commercial production, net charges on foreign exchange

contracts and adjustments arising from exchange rate variations attributable to the fixed assets

are capitalised.

D. Leased Assets

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a) Operating Leases: Rentals are expensed with reference to lease terms and other considerations'

b) (I) finance leases prior to 1st April, 200l: Rentals are expensed with reference to lease terms

and other considerations. (II) Finance leases on or after 1st April, 2001the lower of the fair value

of the assets and present value of the minimum lease rentals is capitalised as fixed assets with

corresponding amount shown as lease liability. The principal component is charged to profit and

loss accent.

(c) However, rentals referred to in (a) or (b)

(l) Above and the interest component referred to in (b) (a) above pertaining to the period up to

the date of commissioning of the assets are capitalised. d) All assets given on finance lease are

shown as receivables at an amount equal to net investment in the lease, initial direct costs in

respect of lease are expensed in the year in which such costs are incurred. Income from lease

assets is accounted by applying interest rate implicit in the lease to the net investment.

E. Intangible Asset

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated

amortisation / depletion. AII costs, including financing costs till commencement of commercial

production, net charges on foreign exchange contracts and adjustments arising from exchange

rate variations attributable to the intangible assets are capitalised.

F. Depreciation and Amortization

Depreciation on fixed assets is provided to the extent of depreciable amount on written down

value method (WDV) at the rates and in the manner prescribed in Schedule XIV to the

Companies Act, 1956 over their useful life except: on fixed assets pertaining to refining Segment

and SEZ units, deprecation is provided on Straight Line Method (SLM) over their l useful life;

on fixed bed catalyst with a life of 2 years or more, depreciation is provided over its useful

life ,on fixed bed catalyst having life of less than 2 years,100% deprecation is provided in the

year of addition; on additions or extensions forming an integral part of existing plants ,including

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incremental cost arising on account of translation of foreign currency liabilities for acquisition of

fixed assets and insurance spares, depreciation is provided as aforesaid over the residual life of

the respective plants; premium on leasehold land is amortized over the period of lease; technical

knowhow is amortized over the useful life of the underlying assets and computer software is

amortized over a period of 5 years ;on intangible assets - development rights, depletion is

provided in proportion of oil and gas production achieved via-a-via the proved reserves (net of

reserves to be retained to cover abandonment costs as per the production sharing conflict and the

Government of India’s share in the reserves considering the estimated future expenditure on

developing the reserves as per technical evaluation; intangible assets - others are amortized over

the period of agreement of right to use ,provided in case of jelly the aggregate amount amortized

to date is not less that the aggregate rebate availed by the Company; on amounts added on

revaluation, deprecation is provided as aforesaid over the residual life of the asset as certified by

the valuers on assets acquired under finance lease from 1st April 20A1 depreciation is provided

over the lease term.

G. Impairment of Assets

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An

impairment loss is charged & loss a/c in the year in which asset is identified as impaired. The

impairment loss recognized in prior accounting period is reversed if there has been a change in

the estimate of recoverable amount.

H. Foreign Currency Transactions

(a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing

on the date of the transactions or that approximates the actual rate at the date of the transactions.

(b) Monetary items denominated in foreign currencies at the yearend are restated at year end

rates .In case of items which are covered by forward exchange contracts, the difference between

the yearend rate and rate on the date of the contract is recognized as exchange difference and the

premium paid on forward contracts is recognised over the life of the contract.

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(c) Non monetary foreign currency items are carried at cost.

(d) In respect of branches, which are integral foreign operations, all transactions are translated at

rates prevailing on the date of transaction or that approximates the actual rate at the date of

transactions. Branch monetary assets and liabilities are restated at the yearend rates.

(e)Any income or expense on account of exchange difference either on settlement or on

translation is recognised in the Profit & loss account except in case of long term liabilities, where

the relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of

such assets.

I. Investments

Current investments are carried at lower of cost and quoted/fair value; computed category

wise .Long term Investments are stated at cost .Provision for demotion in the value of long-term

investments is made only if such a decline is other than temporary.

J. Inventories

Items of inventories are measured at lower of cost and net realizable value after providing for

obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and

other costs including manufacturing overheads incurred in bringing them to their respective

present location and condition. cost of raw materials, process chemicals, stores and spares,

packing materials, trading and other products are determined on weighted average basis. By –

products are valued at net realizable value.

K. Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect

ultimate collection. Revenue from operations include sale of goods ,services ,sales tax , service

tax, excise duty and sales during trial run period adjusted for discounts (net), Value Added Tax

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(VAT) and gain /loss on corresponding hedge contracts .Dividend Income is recognized when

right to receive is established. Interest income is recognized on time proportion basis taking into

account the amount outstanding and rate applicable.

L. Excise Duty / Service Tax and Sales Tax / value Added tax

Excise duty / Service tax is accounted on the basis of both, payments made in respect of goods

cleared / services provided as also provision made tor goods lying in bonded warehouses. Sales

tax / Value added tax paid is charged to Profit and Loss account.

M. Employee Benefits

(i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the

profit and loss account of the year in which the related service is rendered.

(ii) Post employment and other long term employee benefits are recognized as an expense in the

Profit and Loss account for the year in which the employee has rendered services. The expense is

recognized at the present value of the amounts payable determined using actuarial valuation

techniques. Actuarial gains and losses in respect of post employment and other long term

benefits are charged to the Profit and Loss account.

(iii) In respect of employee’s stock option, the excess of fair price on the date of grant over the

exercise price is recognized as deferred compensation cost amortized over the vesting period"

N. Employee Separation Costs

Compensation to employees who have opted for retirement under the voluntary retirement

scheme of the Company is charged to the Profit and Loss account in the year of exercise of

option.

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O. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are

capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes

substantial period of time to get ready for its intended use. All other borrowing costs are charged

to Profit and Loss account.

P. Financial Derivatives and commodity Hedging Transactions

In respect of derivative contracts, premium paid, gains / losses on settlement and losses on

restatement are recognized in the Profit and Loss account except in case where they relate to the

acquisition or construction of fixed assets, in which case, they are adjusted to the carrying cost of

such assets.

Q. Accounting for Oil and Gas Activity

The Company has adopted Full Cost Method of accounting for its Oil and Gas activity and all

costs incurred in acquisition, exploration and development are accumulated considering the

county as a cost centre. Oil and Gas Joint Ventures are in the nature of Jointly Controlled Assets.

accordingly, assets and liabilities as well as income and expenditure are accounted on the basis

of available information on line by line basis with similar items in the Company’s financial

Statements, according to the participating interest of the company.

R. Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the

provisions of the Income-tax Act, 1961 . Deferred tax resulting from "timing difference" between

taxable and accounting income is accounted for using the tax rates and laws that are enacted or

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substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried

forward only to the extent that there is a virtual certainty that the asset will be realized in future.

S. Premium on Redemption of bonds / debentures

Premium on redemption of bonds / debentures, net of tax impact, are adjusted against the

Securities Premium Account.

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CHAPTER V

Conclusion

The company's overall position is at a very good position. The company achieves sufficient T

years. The long term solvency position of the company is very good. The company achieves

sufficient profit in past four years. The long term solvency position of the company is very good.

The company maintains low liquidity to achieve the high profitability. The company distributes

dividends every year to its share holders. The profit of the company decreased in the last year

due to maintaining the comparatively high liquidity. The net working capital of the company is

maximum in last to last year.

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