RELIANCE INDUSTRIES LIMITED Management Control System and Financial Analysis Submitted By Manoj S Rengar Submitted To Prof.

Vivek Raina 2011 1 XCELLON INSTITUTE SCHOOL OF BUSINESS

A Project Report On Reliance Industries Limited Submitted By Manoj S Rengar M0007 Submitted To Prof. Vivek Raina Xcellon Institute School of Business 2

Acknowledgement Words are indeed inadequate to convey my deep sense of gratitude to all those wh o have helped me in completing this project to the best of my ability. Being a p art of this project has certainly been a unique and a very productive experience on my part. I would also like to thank my professor and project coordinator, Mr . Vivek Raina for assigning me a project of such a great learning experience and acquainting me with real life project of Reliance Industries limited. I am very grateful to Mr. Vivek Amin, Co-founder of Xcellon Institute School of Business Management Who has given me the opportunity to do this project in the Reliance I ndustries Ltd. and very thankful to all lecturers of Xcellon for their useful gu idance and advise. This project would not have been successful without the help of My Friends who are directly or indirectly help me to complete this project. L ast but not least I would like to thank the entire Faculty member and my friends Xcellon Institute, who have directly or indirectly helped me with their moral s upport for the completion of my project. 3

Table of Content Sr.No 1 2 3 4 5 6 7 8 9 10 11 12 13 Executive Summary Introduction History Manag ement of Reliance Industries Organization Structure Management Control System Fi nancial Analysis Comparative Analysis of RIL with other company Balance sheet co mparison Cash Flow of Reliance Industries Accounting System Conclusion Bibliogra phy Particular 5 7 13 35 37 42 47 62 64 66 68 71 72 Page. No 4

Executive Summary The Reliance Industries India group is India's largest private sector conglomera te. The Reliance Industries Limited was started by the legendary Late Dhirubhai H. Ambani. After a humble start in the late 1970's as a textile company its succ ess skyrocketed and now covers almost all industry verticals. The Reliance Indus tries India group is India's largest private sector conglomerate. The Reliance I ndustries Limited was started by the legendary Late Dhirubhai H. Ambani. After a humble start in the late 1970's as a textile company its success skyrocketed an d now covers almost all industry verticals. In this report first I have given the general information regarding the company. It includes the introduction and history of company; its disinvestments, milest ones, board of directors, quality policy, financial position of the company, and the products. I have also given the comparative analysis of its group companies and it various divisions with its net revenue and briefly describe its function al department of the company like Production department, stores, finance departm ent, marketing department and human recourse department etc. I had also describe d its management control briefly by showing its organization chart and structure with future strategy which they going to implement in future. In the second par t, I have focused on my core project regarding the procedure followed for the ca sh and bank management at RIL and its analysis with ration and interpretation. I n the end, the conclusion and the bibliography are given. The report totally dep ends on the secondary data and it may be possible that the data from which the r eport is made may not appear in the report because some data is confidential for the company. From given financial analysis I come to know that this year perfor mance of Reliance is decrease compare to last year but in the balance sheet it w as seen that sales was increase but on the other side there are some other cost of paying the interest because amount of debt was increase this year and profit was decrease this was I assumed on the basis of ratio analysis by comparing with last three year performance. 5

Company Profile Reliance Industries GROWTH IS LIFE 6

Introduction The Reliance Industries India group is India's largest private sector conglomera te. The Reliance Industries Limited was started by the legendary Late Dhirubhai H. Ambani. After a humble start in the late 1970's as a textile company its succ ess skyrocketed and now covers almost all industry verticals. Today, Reliance In dustries generates revenues in excess of USD 44 billion and exports products wor th USD 7 billion to more than 100 countries. The Reliance Industries Limited is a 'Fortune Global 500 company' and employs more than 25,000 professionals across the world. Reliance enjoys leadership in polyester yarn & fiber produce and is among the top 5 players in the world in major petrochemical products. Reliance I ndustries Limited holds largest Oil & Gas exploration area in India and has achi eved 74 % success rate in terms of discoveries. Reliance enjoys a preeminent pos ition in terms of its contribution to the Indian economy with revenues equal to 2.6% of India's GDP. It also contributes 7.7% of India's total exports, 7.9% of the Government of India's indirect tax revenues and close to Backward vertical i ntegration has been the cornerstone of the evolution and growth of Reliance. Sta rting with textiles in the late seventies, Reliance pursued a strategy of backwa rd vertical integration - in polyester, fibre intermediates, plastics, petrochem icals, petroleum refining and oil and gas exploration and production - to be ful ly integrated along the materials and energy value chain. The Group's activities span exploration and production of oil and gas, petroleum refining and marketin g, petrochemicals (polyester, fibre intermediates, plastics and chemicals), text iles, retail and special economic zones. Reliance enjoys global leadership in it s businesses, being the largest polyester yarn and fibre producer in the world a nd among the top five to ten producers in the world in major petrochemical produ cts. Major Group Companies are Reliance Industries Limited (including main subsi diary Reliance Retail Limited) and Reliance Industrial Infrastructure Limited. R eliance Industries India has been a pioneer in the equity culture cult and is hi ghly respected for its corporate transparency, deep market penetration ability, innovations and above all for its ability to generate 'products & services' for all sections of the society. 7

Its guardianship for India Inc. stupendous growth has been felicitated with no o f awards in areas like Quality, Energy Management, Health Safety & Environment, Exports and Retail & Franchising. It also bagged 'Golden Peacock Award' for Corp orate Management in 2005-2006 and enjoys high corporate ranking in Fortune Globa l 500 Company. THE LEGENDARY DHIRUBHAI .H. AMBANI Dhirajlal Hirachand Ambani, also known as Dhi rubhai (28 December 1932, - 6 July 2002) was an Indian rags-to-riches business t ycoon who founded Reliance Industries in Mumbai. Ambani took his company (Relian ce) public in 1977, and by 2007 the combined fortune of the family (sons Anil& M ukesh and daughters Dipti & Nina) was 60 billion dollars, making the Ambanis the richest family in the world. He moved to Aden, Yemen, when he was 16 to work wi th A. Besse & Co. and eventually returned to India and started "Majin", which wa s to import polyester yarn and export spices, in partnership with his cousin, Ch ampak Lal Damani. Dhirubhai was a known risk taker and he believed in building i nventories, anticipating a price rise, and making profits. Ambani's net worth wa s estimated at about Rs. 10 lakh by late 1970s. He is credited with starting the equity cult in India. More than 58,000 investors from various parts of India su bscribed to Reliance's IPO in 1977. In 1986 The Annual General Meeting of Relian ce Industries was held in Cross Maidan, Mumbai and was attended by more than 350 ,000 shareholders and the Reliance family. In 1982, Reliance Industries came up against a rights issue regarding partly convertible debentures. It was rumoured that company was making all efforts to ensure that their stock prices did not sl ide an inch. Sensing an opportunity, a bear cartel which was a group of stock br okers from Calcutta started to short sell the shares of Reliance. To counter thi s, a group of stock brokers till recently referred to as "Friends of Reliance" s tarted to buy the short sold shares of Reliance Industries on the Bombay Stock E xchange. After this incident, many questions were raised by his detractors and t he press. In response, the then finance minister, Pranab Mukherjee informed the house that a Non-Resident Indian had invested up to Rs. 22 Crores in Reliance du ring 1982-83. The interesting factor was that all the promoters or owners of the se companies had a common surname Shah. An investigation by the Reserve Bank of India in the incident did not find any unethical or illegal acts or transactions committed by Reliance or its promoters Over time, Dhirubhai diversified his bus iness with the core specialisation being in petrochemicals and additional intere sts in telecommunications, information technology, energy, power, retail, textil es, infrastructure services, capital markets, and logistics. 8

He has been accused of acting unethically; having manipulated government policie s to suit his own needs, and has been known to be a king-maker in government ele ctions. Although most media sources tend to speak out about business-politics ne xus, the Ambani house has always enjoyed more protection and shelter from the me dia storms that sweep across the country. A film, Guru (2007) directed by Mani R atnam, alleged to be inspired by the life of Dhirubhai Ambani was released on 12 January 2007. Reliance after Dhirubhai The Reliance Empire was split between the Ambani brothe rs, Mukesh Ambani getting RIL and IPCL & his younger sibling Anil Ambani heading Reliance Capital, Reliance Energy and Reliance Infocomm. The entity headed by M ukesh Ambani is referred to as the Reliance Industries Limited whereas Anil's Gr oup has been renamed Anil Dhirubhai Ambani Group (ADAG).His daughter Nina Kothri along with her husband B H Kothari started Java green in 2004, a coffee retail ch ain along with Reliances Web World stores. MUKESH AMBANIS GROUP OF BUSINESSES Mukesh Ambani owns two main industries namely: Reliance Industries Limited Indian Petrochemical Corporation Limited The follow ing are the categories of businesses that are being dealt with: Exploration and Production Petroleum refining and marketing Petroleum Textiles Retail The major associates and subsidiaries of Reliance Industries Limited are: Reliance Petrole um Limited Reliance Retail Limited Reliance Global Management Services (P) Ltd R eliance Biopharmaceuticals Ranger Farms Ltd 9

Reliance Engineering Associates (P) Ltd Reliance Oil & Gas Find (Petrochemicals Business) Reliance Petroleum Limited (RPL) Reliance Petroleum Reliance Petroleum Limited w as set up by Reliance Industries Limited (RIL), one of India s largest private s ector companies. RPL benefits from a strategic alliance with Chevron India Holdi ngs Pte Limited, Singapore, a wholly owned subsidiary of Chevron Corporation USA (Chevron), which currently holds a 5% equity stake in the Company. Refining act ivities of Reliance Industries Limited are carried out at the Jamnagar refinery complex with refining capacity of 27 million tonnes per annum (540,000 barrels p er day). The Jamnagar Refinery is a private sector crude oil refinery owned by R eliance Industries Limited in Jamnagar, India. The refinery was commissioned on 14 July 1999 with an installed capacity of 661,000 barrels per day. It is the la rgest Greenfield refinery in the world. Jamnagar has emerged as the Refining Hub of the World with the largest refining complex with an aggregate refining capacit y of 1.24 million barrels of oil per day in any single location in the world. Th e refinery can process a wide variety of crudes- from very light to very heavy ( from 18 to 45 degree API) and from sweet to very heavy (with sulphur content fro m 0 to 4.5%). With an annual crude processing capacity of 580,000 barrels per st ream day (BPSD), RPL will be the sixth largest refinery in the world. The polypr opylene plant will have a capacity to produce 0.9 million metric tonnes per annu m. RPL was awarded the International Refiner of the Year award in the year 2008 an d it runs a nearly zero-emission refinery. Reliance Retail Limited Reliance is g earing up to revolutionize the retailing industry in India. Towards this end, Re liance is aggressively working on introducing a pan-India network of retail outl ets in multiple formats. A world class shopping environment, state of art techno logy, a seamless supply chain infrastructure, a host of unique value-added servi ces and above all, unmatched customer experience, is what this initiative is all about. Ensuring better returns to Indian farmers and manufacturers and greater value for the Indian consumer, both in quality and quantity, will be an integral feature of this project. By creating value at all levels, the project boasts of a seamless supply chain infrastructure, unprecedented even by world standards. Through 10

multiple formats and a wide range of categories, Reliance is aiming to touch alm ost every Indian customer and supplier. RIL s Retail Project will be through the following companies: Reliance Fresh Reliance Footprint Reliance Time-Out Relian ce Digital Reliance Wellness Reliance Trendz Reliance Autozone Reliance Super Re liance Mart Reliance i-store Reliance i-store Reliance Home Kitchens Reliance Je wel Reliance Retail continues to consolidate its presence and operations with more t han 900 stores in over cities where it is operational today. E-Office Planet Pri vate Limited, Reliances joint venture with Office Depot has expanded its footprin t across India for serving its customers in a better way. Reliance Global Manage ment Services (P) Limited Reliance Global Services (P) Ltd is one of the fast gr owing IT solutions and services provider with offices in USA, Hyderabad-India, d elivering best-in-class services to help clients reduce costs, enhance organizat ional flexibility, and improve business and IT performance. They have proven cap abilities across various industry verticals. Their wide spectrum of solutions an d services encompass ERP specialized in SAP Custom application development, Appl ication maintenance and support, Management-consulting services through Contract staffing enabled with in-house competency development. Reliance Global manageme nt team comprises of ace professionals, each with years of managerial experience , rich industry knowledge and multidimensional skills. They form a formidable th ink tank with their industry knowledge, understanding of client requirements, pr ocesses and key client backgrounds. Reliance Biopharmaceuticals Reliance Life Sc iences (Rabale, India), a Reliance Industries subsidiary, is building a protein manufacturing facility at the Dhirubhai Ambani Life Sciences Centre at Rabale, n ear Mumbai. The company will invest more than Rs. 9 billion ($200 million) to bu ild the complex, which will be Reliance s first such facility. It will use mamma lian cell and microbial fermentation technology to produce proteins. Completion is due at year-end, and FDA validation is expected to follow eight months later. The protein plant will have initial capacity for 10,000 litres of mammalian cel l culture and 1,000 litres of microbial cell culture. 11

Ranger Farms Reliance Industries is likely to turn their consumer retail project Reliance Fresh into a separate entity. It could be added to the Ranger Farm bra nd name. This particular division of the company deals in food, fruits and veget ables and consumer products. Reliance Engineering Associates Private Limited (RE AL) Reliance Engineering Associates Private Limited (REAL) is a Reliance Group C ompany dedicated to Engineering procurement and construction of various projects in both reliance group companies and other industries. Their services include p art design for moulding, mould design, prototype and production tooling, pre-pro duction prototyping, and full-scale manufacturing of precision thermoplastic and thermo set plastic parts. These parts are used in a wide range of demanding and critical end-use applications. Building on this core expertise, Reliance Engine ering provides contract manufacturing services for original equipment manufactur ers. This service includes procurement to rigid specifications and build-to-prin t assembly of low to moderate volume products. Reliance Petrochemicals Polymer ( PP, PE and PVC) production volumes decreased by 9% to 3,076 KT. Production was l ower primarily on account of planned shutdown of Polypropylene (PP) plant at Jam nagar in October 2008 to improve product swing capability and yield. RIL produce d 1,755 KT of ethylene and 696 KT of propylene, a decrease of 7% each over the p revious year primarily due to lower Propane cracking. Polyester (PFY, PSF and PE T) production volume decreased by 2% to 1,534 KT. RIL has maintained its focus o n specialty products which account for 55% of PSF and 38% of PFY production. RILs fibre intermediates (PX, PTA and MEG) production decreased by 3% to 4,583 KT du ring the year. Revenue for the petrochemicals segment for the year decreased mar ginally from Rs 53,000 crores to Rs. 52,767 crores (US$ 10.4 billion). Indian Pe trochemicals Corporation Limited (IPCL) RIL had acquired erstwhile public sector petrochemical company in 2002 by successfully bidding for government equity and become a strategic partner in IPCL after which Reliances controlling share was 4 7.3%. Reliance Industries formally assumed control of Indian Petrochemical Corpo ration Ltd (IPCL) with Mukesh Ambani as the chairman of the company in June 5, 2 002. IPCL, the pioneering petrochemical company in India, was managed by a board nominated by Government of India till June 4, 2002. Later, the government dives ted 26 per cent of the 12

companys equity shares in favour of Reliance Petro investments Ltd through an ope n, transparent and competitive bidding process. Effective April 1, 2005, the six polyester companies namely Apollo Fibres Limited (AFL), Central India Polyester s Limited (CIPL), India Polyfibres Limited (IPL), Orissa Polyfibres Limited (OPL ), Recron Synthetics Limited (RSL) and Silvassa Industries Private Limited (SIPL ) have been amalgamated with IPCL. The two brothers were engaged in a battle ove r control of the, then, Rs 90,000- crores Reliance Empire after their fathers dem ise and by Jan 2005, RIL Chairman Anil Ambani quit as director and Vice-Chairman of the Reliance Group Company IPCL Ltd .Anil resigned on the ground that he was unwilling to work on the same board where Anand Jain, a close confidante of Muk esh, was present. Anil is also believed to have complained that Jain was running a personal vilification campaign against him, the sources said. RIPCL to RIL: The boards of Reliance Industries and IPCL on March 11, 2007 approved the merger be tween the two companies at a swap ratio of 1:5. This means IPCL shareholders wil l get one share of RIL for every five held by them. The appointed date of merger of IPCL with RIL is April 1, 2007, subject to approvals from the courts and oth er regulatory authorities. The name IPCL will disappear when the two merge Textiles RIL continues to operate one of the most modern textile complexes in Asia with n ew investments in design, modern weaving, and state-of-the-art finishing equipme nts Major growth drivers for VIMAL continued to be retail presence across India, constant innovation in products, cost efficiency and improved customer service. The division continued adding clients in auto textiles and is now a significant supplier to major automobile manufacturers in India. The new product initiative Fresca anti-microbial and anti-bacterial work-wear apparel fabrics Home f s are: urnishing and auto-textiles Silk-Amino suiting fabrics Fire-retardant and waterrepellent tent fabrics for defence/ police services Insect & mosquito repellent nets, as per WHO standards, which will find usage in several areas of the world affected by mosquitoes / insects 13

Reliance Oil and Gas Finds In 2002, Reliance found natural gas in the Krishna Go davari basin off the coast of Andhra Pradesh near Vishakhapatnam. It was the lar gest discovery of natural gas in world in financial year 2002-2003. On 01 April 2009, Reliance Industries (RIL) commenced natural gas production from its D-6 bl ock in the Krishna-Godavari (KG) basin. The gas reserve is 7 trillion cubic feet in size. Equivalent to 1.2 billion barrels (165 million tonnes) of crude oil, b ut only 5 trillion cubic feet are extractable. On 2008 Oct 8, Anil Ambani s Reli ance Natural Resources took Reliance Industries to the Bombay High Court to upho ld a memorandum of understanding that said RIL will supply the natural gas at $2 .34 per million British thermal units to Anil Ambani. Reliance s Oil & Gas Find. RIL Product Mix Oil & Gas 3% Fibre Int. 29% Polyester 22% Chemicals 11% Plastics & Int. 34% Fabrics 1% Sources: http://www.ril.com/html/aboutus/aboutus.html 4th January 2011 14

History 1973 On 8th May the company was incorporated in Karnataka state as a public limi ted company under the name Mynylon Ltd. to manufacture synthetic blended yarns a nd fabrics, polyester filament yarn, polyester glass shells and color TV picture tubes. 1975 On 28th June this company was converted into a public limited company. On 1 1th February 1966 a company by name of Reliance Textiles Industries Pvt Ltd was incorporated in Maharashtra. It established a synthetic fabrics mill in the same year at Naroda in Gujarat. On 1st July, Reliance Textile Industries Ltd. was am algamated with Mynylon Ltd. 1977 With effect from 11th March 1st the name of Mynylon Ltd was changed to Reliance Textiles Industries Ltd. The company manufactures synthetic blended yarns and fa brics polyester filament yarn polyester staple fibre chemicals and allied produc ts colour TV glass shells and colour TV picture tubes. The Company s yarns are m arketed under various brand names such as Texalit, Textron, Texlene, Poly dyed a nd polytwist. The company s fabrics are marketed under the brand name VIMAL. On November Dhirajlal H Ambani and Natvarlal H Ambani along with some other existin g shareholders offered for sale at par to the public.28,20,000 equity shares of the Company in order to get the shares of the company listed on the stock Exchan ge at Mumbai.

1979 During the year Sidhpur Mills Co. Ltd which has an installed capacity of 38 ,368 spindles and 490 looms was amalgamated with the company. In terms of the sc heme of amalgamation, the company was to issue and allot for every one equity sh are of Rs. 100 each of Sidhpur, 2 equity shares of Rs.10 each and one bond of Rs .80 of the company. 15

The Company allotted a total of 1,12,000 No. of equity shares of Rs 10 each and 35,000 11% bonds of Rs 80 each to the shareholders of Sidhpur Mills. 1980 Company was set up Polyestr Filament Yarn Plant at Patalganga in Raigad dis trict of Maharashtra with the financial and technical collaboration with E.I Du Pont De Nemours & Co; USA. The Company received a letter to intent from the manu facture of 10,000 tonnes per annum of polyester filament yarn. Financial and tec hnical collaboration was finalized with E.I. Du Pont De Nemours & Co., U.S.A.

1982 5,50,000 - 13.5% Pref. shares issued as Rights to equity shareholders. 19,2 0,000 equity shares issued to debenture holders (Series III) as per the terms of that issue. 815 No. of equity shares allotted out of the Rights issue of 1981. 1983 111,56,741 Bonus Equity shares issued in proportion of 3:5. 64,00,000 No. o f Equity shares of Rs 10 each issued in part conversion of debs. (iv series) on 30.9.1983. Of these, 24,00,000 shares issued as additional entitlement to debent ure holders (iv series) on account of bonus issue. 1984 101,24,675 No. of Equity shares allotted conversion of non-convertible port ion of debentures of Series I, II, III and IV of the total value of Rs 7231.92 l akhs in proportion of 1:4 Equity shares of Rs 10 each for every Rs 100 of debent ures (100,28,359 shares in 1984 and 96,316 shares in 1985). 53,33,333 No. of equ ity shares issued (premium Rs 40 per share) on part conversion of E Series deb entures as on 30.4.1985.Rate of dividend on 13.5% pref. shares increased to 15% effective from 16.5.1984. 16

1985

A letters of intent were received for the manufacture of 50,000 tons per annum o f high density polyethylene (HDPE) and 1,00,000 tones per annum of poly vinyl ch loride (PVC). Technical collaboration agreements were signed with Du Pont for HD PE and with B.F. Goodrich & Co., for PVC. Steps were also taken to set up a proj ect for the manufacture of mono ethylene glycol (MEG), a basic raw material requ ired for the polyester industry. A Collaboration agreement was entered into with Scientific Design Company, New York for this project. The Company installed an additional capacity of 15,125 tons per annum of polyester yarn. With effect from 1st October the running business of the Sidhapur unit was taken over by Devti F abrics Ltd, is a subsidiary of the company. The name of the company was again ch anged from Reliance Textiles Industries Ltd to Reliance Industries Ltd with effe ct from 27th June. On 30th September Devti Fibres Ltd became a subsidiary of the company. Trishna Investments and Leasing Ltd., Reliance Industrial Investments & Holdings Ltd., Reliance Petroproducts Ltd. also subsidiaries of the Company. S teps were in progress for implementing a project for the manufacture of purified terepthalic acid with a capacity of 75,000 tonnes per annum in technical collab oration with Imperial Chemical Industries UK and UOP Processes International Inc . USA. This plant was commissioned during the year.

1986 On March a plant for the manufacture of Polyster Staple Fibre was commissio ned in technical collaboration with F.I DU Pont De Nemours and Co. USA. During t he same year company set up a project for the manufacture of linear alkyl benzen e in technical collaboration with UOP Processes International Inc. USA. As a mea sure of diversification the company undertook to set up a project for the manufa cture of 50,000 tons per annum of linear alkyl the manufacture of 50,000 benzene in technical collaboration with UOP Processes International Inc. USA.

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1987 Three letters of intent were converted into industrial licenses. Subsequent to 30th June, all these industrial licenses were transferred to Reliance Petroc hemicals, Ltd., a company incorporated as a subsidiary of the company. 689,65,48 0 No. of Equity shares allotted (prem. Rs 62.50 per shares) in conversion of G series debs. Out of which 660,30,100 shares allotted in respect of earlier conv ersion of debs. 300,00,000 Rights shares than issued (prem. Rs 50 per share; pro p. 1:4) all were taken up 14,60,000 additional shares were allotted to retain ov er-subscription for rights. Along with the Rights issue, 14,00,000 No. of Equity shares were offered to employees at a premium off Rs 50 per share (under Employ ees Stock Option Scheme) but only 1,11,695 shares taken up. The balance 12,88,30 5 shares allowed to lapse.

1988 Linear Alkyl Benzene Project was commission on the second quarter of the ye ar. LAB is sold under the brand name Relab. 1989 During the year approval was received under the board branding scheme for t he manufacture of 15,000 tonnes per annum of PFY under the description PSF/PFY w ith in the licensed capacity PSF. 1990 During the year pursuant to the policy announced by Govt. regarding minimum economic scale, the company embarked upon expansion of PTA capacity from 1,00,0 00 tonnes to 2,00,000 tonnes per annum. The project is being undertaken in techn ical collaboration with John Brown Engineers & Constructors Ltd. UK. During the year the company entered into a Memorandum of Understanding with West Bengal Ind ustrial Development Corporation Ltd. for setting up a joint sector project for t he manufacture of 15,000 tons per annum of polyester filament yarn. In December a joint sector agreement was entered into for setting up a new company under the name Reliance Bengal Industries Ltd.

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The technical collaborator for PFY and PSF was DuPont, US, and for PTA, UOP Proc essors, US, and ICI, UK. 1991 A technical collaboration agreement for 10 years was entered into with Ston e And Webster Engineering Corporation USA for production of 4 lakh TPA of ethyle ne, 1.95 lakh TPA of propylene and 1.20 lakh TPA of mixed C4 stream. During the period company commissioned its 1,00,000 TPA Ethylene Oxide and Mono Ethylene Gl ycol plant at Hazira. In Series - H Debentures, 304,00,000 - 12.5% secured red eemable partly convertible debentures of Rs 150 each offered on Rights basis in the proportion 1 debenture: 5 equity shares held. Additional 45,60,000 debenture s were allotted to retain over subscription. 15,20,000 debentures were offered t o employees on an equitable basis. Only 15,00,000 debentures taken up. The unsu bscribed portion of 20,000 debentures were allowed to lapse. Rs 55 of the face v alue of each debenture was to be converted into 1 equity shares of Rs 10 each at a premium of Rs 45 per share at the end of 18 months from the date ofallotment. Remaining Rs 95 of the face value of each debenture was to be redeemed at par o n the expiry of 10 years from the date of allotment. In Series - J Debentures 76,00,000 - 14% secured redeemable non-convertible debentures of Rs 150 aggregat ing to Rs 114 crores attached with a detachable warrant, to the equity sharehold ers on rights basis in the proportion of one debenture for every 20 equity share s held. Additional 11,40,000 debentures were allotted to retain over subscriptio n. The debentures of Rs 150 would be redeemed on the expiry of 10 years from the date of allotment. In Series - K Debentures 265,50,000 - 17.5% Secured redeem able non-convertible debentures of Rs 100 aggregating Rs 265.50 crores to the eq uity shareholdes on Rights basis in the proportion of 1 debenture for every 6 eq uity shares held. These debentures would be redeemed on the expiry of 10 years f rom the date of allotment. In 1991-92, RIL commissioned a petrochemicals unit to manufacture HDPE and PVC at Hazira, Gujarat, in technical collaboration with Du Pont and BF Goodrich respectively.

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1992

With effect from 1st March Reliance Petrochemicals Ltd. was merged with the Co. As per the scheme of amalgamation, 1 equity shares of RIL was issued against 10 equity shares held in Reliance Petro Chemicals Ltd. The PFY unit introduced a wi de range of value added products including textured, twisted, high twisted dyed yarn. Approvals were received from the Government towards acquisition of 2 SuezMax crude oil tankers. The Company proposed to set up a project for the manufact ure of 70,000 TPA of polyester yarn and 30,000 TPA of bottle grade PET chips in Hazira. 13% Pref. shares fully paid-up. 183,99,935 No. of Equity shares allotted till date as again 92,00,000 Global depository shares 749,40,440 No. of Equity shares allotted shareholders of erstwhile Reliance Petroleum Ltd., under Scheme of Amalgamation

1993 The PFY division introduced two new products viz., Micro and multi-filament yearn. Several new and customized product range was introduced such as ultra-st abilized raffia grade, high flow injection moulding grade and high ESCR blow mou lding grade. On May 27 the company offered 92,00,000 GDS representing 184,00,000 shares. The company undertook to expand the captive power capacity at Hazira as well as set up new captive power plants at Naroda and patalganga. On completion of these project, an addition of 150 MW of power was to be added, increasing th e total installed captive power plant capacity to 350 MW. The Company proposed t o set up a caustic chlorine plant with a capacity of 1,98,000 TPA of chlorine, 2 ,34,000 TPA Caustic Soda plant at Hazira for manufacture of ethylene di-chloride (EDC). The Company was awarded the medium sized discovered oil and gas fields f or exploration and production. 20

364,60,000 No. of Equity shares allotted on part conversion of H Series debent ure 100,05,586 No. of equity shares allotted again warrants issued. 3,16,667 sha res allotted to SCICI on conversion of loans 103,16,027 shares allotted underlyi ng. 127,66,000 GDS issued on 15.2.94 of which 81,66,571 shares yet to be allotte d. 1994 Company issued 60,00,000 - 18% non convertible secured redeemable debenture s of Rs.100 each on private placement basis with financial institutions. A new p roduct Octene LLDPE was introduced. The Company undertook steps to de-bottleneck ing its existing facilities and modernize the Control and Automation system. It was also proposed to set up a 5,000 TPA of FDY plant plant at Patalganga. In the fibre intermediate business, the Company undertook to set up a World Size PTA p lant of 3,50,000 TPA at Hazira. A new plant to produce 1,20,000 TPA of MEG was t o be set up adjacent to its existing capacity. It also proposed to increase the polyvinyl chloride capacity to 30,000 TPA. The Company signed a Memorandum of Un derstanding with the Government of Assam for implementation of RAPL for manufact ure of 3,00,000 TPA of ethylene, 3,00,000 TPA of Polyethylene and 65,000 TPA of Oxoalchols based on ethylene and propylene products from the gas cracker.

1995 On January the company issued 82,50,000 14% secured redeemable non converti ble debentures of Rs.100 each on a private placement basis with financial instit utions, banks/bodies corporate. On 23rd January, the Company allotted 600,00,000 - 14% Secured redeemable nonConvertible debentures with detachable Warrants of Rs. 12.50 each. During the year company commissioned a new Triethylene Glycol ma nufacturing factory with a capacity of 10,000 TPA to add value to Diethylene Gly col (DEG), a by product from its Monoethylene Glucol plant. TEG is an import sub stitute used in oil exploration, lubricants and speciality application.

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During the year company has an unincorporated joint venture with Enron & ONGC to develop Pann, Mukta and Tapti fields. During June, the Company allotted 995,75, 915 No. of equity shares of Rs 10 each to the erstwhile shareholders of Reliance Polypropylene Ltd. (RPPL) and Reliance Polyethylene Ltd. (RPEL) in the ratio of 30 equity shares of Rs 10 each for every 100 equity shares of Rs 10 each held i n RPPL and 25 equity shares of Rs. 10 each of the Company for every 100 equity s hares of Rs 10 each held in RPPL. During the year company signed a Memorandum of Understanding with the Govt. of Assam for implementation of RAPL (Reliance Assa m Petrochemicals Ltd.) for manufacture of 3,00,000 TPA of ethylene, 3,00,000 TPA of Polyethylene and 65,000 TPA of Oxoalchol based on ethylene and propylene pro ducts from the gas cracker. Reliance Industries Ltd.(RIL), has tied up with Unit ed Oil processing Company of the US, for production of paraxylene at Jamnagar. I n 1995-96, it entered the telecom industry through a joint venture with Nynex, U S. RIL is India s largest private sector enterprise, is a major player in the In dian petrochemicals sector.

1996 The company commissioned 3,50,000 tpa PTA Plant. Reliance Telecom has struc k a deal with US-based telecommunications giant Motorola to set up the cellular network in the secured circles. A letter of intent had been singed by both the c ompanies in October. During the year Co. completed debottelenecking of the PVC p lant and increased the capacity to 270,000 tpa. As a part of its vertical integr ation stategy the Co. undertook to set up a new 1,20,000 TPA MEG project at Hazi ra. During the year Co. commissioned new 1,60,000 TPA. PSF plant based on DuPont technology the PET bottle grade resin plant of 80,000 TPA capacity received tec hnological assistance of SINCO Engineering Italy.

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During the same period company commissioned the 1,20,000 TPA MEG project using A BB Lummus crest, Netherland s techology. And the NGL/Naptha gas cracker palnt us ing technology of stone & webster USA, neared mechanical completion. During the year the company commissioned 60,000 tpa PYF capacity at Hazira. And a 350,000 t pa capacity polypropylene fully computerised plant was commissioned during 96-97 . During the year company commissioned the largest multified carbon plant to pro duce 7,50,000 tpa of ethylene, 365,000 tpa of propylene and over 10,00,000 tpa o f anomatics and other products. During the year company constructed a cost effec tive infrastructure commissioning of 1 single point mooring system, 3 jetties. I t has 1 ocean going tanker, 4 ocean going vessels for liquefied gases and 5 tugs . The expansion is resigned to handle Ethylene, Propylene, EDC,VCM, LPG, Butenes , MEG, PXBZ & Naphtha. During the same year company undertook to implement 3 ind ependent power projects in separate entities with a total power generating capac ity of 1331 MW at Patalganga, Bawana, Jamnagar. 15% Pref. shares redeemed. 7,908 shares out of these meant for amalgamation issued. 14% Pref. CR redeemed. Durin g the period Reliance Industries Limited, is to tie-up with Nynex Corporation to jointly bid for the licenses to operate basic and cellular telecom networks thr oughout India. Reliance Industries Ltd., has tied up with the $ 16-billion Baby Bell telecom company from the US, the Nynex. The combine will bid for basic and cellular mobile telephone service with the Department of Telecommunications. The company was awarded four separate exploration blocks.

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1997

Enron Oil Gas, the joint venture partner and operator presented a proposal to Ta pti Consortium participants seeking approval of a new development plant for Tapt i gas fields by which the volumes could reach 17 million standard cubic meters d uring 2000 if the plan was approved. During the year Co. commissioned an 80,000 tonnes bottle grade PET Chip plant at Hazira manufacturing complex. The chips wa s marketed under the brand name Relpet. The company commissioned a new 3,50,000 tpa PTA manufacturing facility based on ICI, UK technology. The Company proposed to set up two more plants one PP plant with capacity of 4,00,000 tpa and these paraxylene plants with an aggregate capacity of 1.4 million tpa. Company has set up a refinery at village Motikhvdi, Gujarat underthe name Reliance Petroleum Lt d. Reliance along with its subsidiary Reliance Industrial Investments & Holdings Ltd. hold 39% of the paid up equity capital of Reliance Petroleum on a fully de luted basis. Reliance undertook to make significant investments in Reliance Petr oleum Ltd., for setting up of the grass root refinery at Jamnagar, Gujarat. 46,6 0,90,452 bonus equity shares allotted 7289149 No. of equity shares allotted at c onversion of debentures and reissue of forfeited shares. Reliance Industries Ltd . (RIL) has successfully commissioned its third 30,000 tonnes per annum (tpa) po lyester filament yarn (PFY) plant at Hazira in Gujarat. The capacity at the Hazi ra plant is being further extended to 120,000 tpa of PFY by setting up another 3 0,000 tpa plant shortly. Bharti Telenet and Reliance were awarded letters of int ent for Madhya Pradesh and Gujarat circles respectively. Reliance Industries wil l commission the world s largest grass-root single-stream multifeed cracker plan t. The Reliance Industries Ltd. (RIL) has achieved the distinction of becoming t he first company in the country to undertake security audit in the interest of i ts investors.

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Reliance Industries Limited has commissioned its second Mono Ethylene Glycol pla nt based on Shell process, with a capacity of 120,000 tons per annum, at its Haz ira Petrochemicals Complex. The National Securities Depository Ltd. (NSDL) and R eliance Industries Ltd. are embarking on a joint marketing effort to issue RIL b onus shares in the demat form. RIL was one of the first companies to join the de pository and by issuing bonus shares through the demat form, investors will be a ssured of clean securities. Around 57 lakh euro-convertible bonds of Reliance In dustries Ltd. were converted into equity shares ahead of the book-closure for th e 1:1 bonus issue on November 29. Reliance Industries Ltd. has bagged the Nation al Energy Conservation Award, 1997 in the petrochemical sector. The petrochemica ls giant has won the special prize for the fourth consecutive year.

1998

For the first time Reliance Industries is entering the health-care sector with a n initial investment of Rs.100 crore. It has become joint trustees of Sir Hurkis ondas Nurrotumdas Hospital at Charni Road in Mumbai. Reliance Industries, India s largest private sector company, has undertaken a major initiative on corporate governance, under which it has accorded a vital role to its nonexecutive direct ors. Reliance Industries Ltd (RIL) founder and chairman Dhirubhai Ambani was awa rded the prestigious the Dean s medal by the Wharton school (University of Penns ylvania) at a glittering ceremony in Mumbai on 15th June. Reliance Industries Lt d (RIL) has won the runner up award in the Best emerging market company investor relations category for 1998 instituted by UK s Investor Relations Magazine in a ssociation with Financial Times. Reliance is the first and only Indian company t o have received this prestigious award and the only Asian company to get this aw ard in the emerging markets category. Reliance Industries Ltd (RIL) has struck a n understanding with the US based engineering firm Carter burgess Ltd to underta ke projects in the road sector through the joint venture route. In the proposed joint venture, reliance will have the majority stake. RIL had entered into a 50: 50 joint venture with Hoechst Fibres (a part of Hoechst AG, Germany) to manufact ure aide range of polyester technical fibres. 25

The Chennai High Court has declined to interfere with the award of the Rs 15,000 -crore private power project at Jayamkondam in Tamil Nadu to Reliance Industries Ltd (RIL) by the State Industrial Development Corporation (TIDCO). 65,00,000 Re d. Pref. shares of Rs. 100 each issued. 1999 The Company undertook the commissioning of its jamnagar petrochemicals complex. Reliance Industries Ltd, is currently setting up a Rs 5,550 crores petrochemical complex at Jamnagar. The un-incorporated joint venture between Reliance Industr ies, Oil and Natural Gas Corporation (ONGC) and the US-based multinational Enron Oil and Gas has submitted a proposal with the union petroleum ministry for a fo ur-fold increase in its gas production from five million tons a day to 22 millio n tons a day. Reliance Industries Ltd (RIL), India s largest private company, ha s chalked out a capital allocation framework to enhance shareholder value and en sure profit growth and capital productivity. Once again Reliance Industries Limi ted (RIL) is in the international limelight. RIL been named as one of the World s 100 best-managed companies for the year 1999 by Industry Week (IW), a leading US magazine. During 1999-2000, the company completed its integrated Jamnagar com plex, in a record period of less then 3 years.

2000 Reliance has been ranked the second largest producer of POY and PSF in the world, and the largest polyester manufacturer in India, with a marketshare of 51 %. Reliance is setting up a new venture for e-commerce related services and has roped in National Stock Exchange s head of market operations, derivatives, IPO and membership Ashishkumar Chauhan for piloting the new project. Reliance Indust ries Ltd to sign PSCs for exploration blocks in West Coast. Reliance Industries Ltd. to buy back shares up to Rs.1,100 crore at Rs.303. The US-based Eastman Che mical Company signed MoU with Reliance Industries, to develop the market for Spe ctar copolymer and Eastar PETG copolyester in India. 26

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Reliance and Malaysia s Petronas have signed an agreement with National Iranian Oil Co. to set up a 7.5 million-tonne per year liquefied natural gas plant in Ir an, industry. The Company has informed that, Reliance Power Ventures Ltd. awholl y owned subsidiary of the company, propose to acquire an aggregate of 2,75,45,13 3 fully paid equity shares of BSES of face value of Rs. 10/- each at a price of Rs. 234/- per fully paidup equity share. Reliance Power Ventures, a wholly-owned subsidiary of Reliance Industries. Reliance Industries internet service brand Only Smart was launched in Calcutta. The Karnataka Government and Reliance Indus tries have set in motion a joint venture in e-governance to start 7,500 info kio sks all over the State. The Company has acquired 100 acres at Patalganga to set up the proposed 447 mw power project. Reliance Industries Ltd. and Jet Airways h ave signed an agreement in principle to work together on planned airport privati sation projects. Issue of equity linked warrants under Employees Stock Option Pl an. Reliance Industries Ltd to set up a world-class Indian Institute of Informat ion Technology. Reliance Industries Ltd. is set to consolidate the financials o f BSES Ltd. under its own income statement from the second quarter of this fisca l. The board has issued 5,26,87,851 equity-linked warrants under the ESOP in acc ordance with the resolutions passed at the company s 26th AGM. Reliance Industri es Ltd is the first private sector Indian company to find a place in the Forbes International list of the 800 largest non-US companies, published in the curren t edition of the magazine. The Company has been selected as one of the World s 1 00 best-managed companies for the Year 2000. Reliance Industries Ltd (RIL) has t opped in mobilisation through debt private placements during the first quarter o f the current fiscal.

The Company executive director Nikhil R Meswani has been elected as president of Associaton of Synthetic Fibre Industry. Credit rating agency Crisil has assigne d the highest safety rating of AAA to the Rs 500 crore non-convertible debentu re issue of the company. Reliance Industries is set to take over the polyester b usiness of JCT in a deal valued at Rs 492 crore. Reliance Industries Ltd was com pleting the Assam Gas Cracker Project within 44 months on finalisation of Gas Su pply Agreement with Oil India Ltd and ONGC/GAIL, and the handing over possession of land at Lepetkota in Dibrugarh district. Reliance has formed a joint venture with Andhra Pradesh Technological Services to set up 7,500 Internet kiosks acro ss Andhra Pradesh to provide electronic governance to rural areas. Reliance Indu stries as entered into a collaboration agreement with Nova Chemicals of Switzerl and for the manufacture of high density polyethylene and develop new grades of p olymers like film, pipe, blow moulded containers etc. Reliance has been awarded the entertainment centre property in Mumbai s upscale Bandra-Kurla commercial co mplex. Reliance holds a 30% interest in an unincorporated joint venture with Enr on and ONGC, to develop the proven Panna, Mukta and Tapti (PMT) oil and gas fiel ds. Enron has a 30% share and ONGC the balance 40% share.

2001 During FY 2000-01, Reliance was, in a 90:10 consortium with Niko Resources of Canada, awarded 12 new exploration blocks by the government through a process of competitive international bidding. Reliance Industries and RPG have envisage d interest in setting up a convergence network in Industrial Township of greater Noida. In April 2001, RIL successfully completed the first phase of a comprehen sive restructuring plan for its textiles business located at Naroda, near Ahmeda bad in the state of Gujarat, which presently contributes 1% of RIL s total reven ues. Fitch Ratings India Ltd. has assigned Ind AAA rating to the Rs 5,000-cror e nonconvertible debentures of the Company. 28

Reliance Industries has acquired an equity stake in five of Tullow Oil s blocks in Gujarat and Andhra Pradesh. Reliance Industries has signed a memorandum of as sociatin with National Iranian oil and BP to undertake a million easibility stud y to develop an LNG project in southern Iran. Reliance Industries has entered in to an alliance with Bangalore-based Indus League for the manufacture of its sole branded garment, Reance. The Company has extended the share buyback programme f or one more year as it has not bought back any shares during the current buyback period. Reliance Industries has raised its stake in Larsen & Tourbo from 0.38 p ercent to 2.87 percent. It has increased its stake in equity share capital of BS ES, an electirc utility company, through open offer to 27%. Further it has annou nced the largest share buy back of Rs 1,100 crore at a maximum price of Rs 303 p er share. Reliance Industries will invest Rs 1,500 crore (0 million) in oil and gas exploration and production sector over the next three years. Reliance Indust ries Ltd (RIL) has been granted the Golden Super Star Trading House status by th e Directorate-General of Foreign Trade (DGFT) in recognition of RIL s outstandin g achievement in export. RIL is the first manufacturer-exporter to be given this status RIL has obtained ISO 9002 certification from BVQI for its Patalganga and Hazira complexes. RIL is the first private sector company in India to be rated by the international credit rating agencies. Reliance is the world s third large st producer of paraxylene (PX), and the world s fourth largest producer of PTA. Within the country, Reliance is the largest manufacturer of PX, PTA and MEG, wit h a marketshare of over 80%. Reliance is the largest producer of polymers in the country with a marketshare of 52%. Reliance has a capacity of nearly a million tons per year of polypropylene (PP), 400,000 tonnes per year of polyethylene (PE ) and 300,000 tonnes per year of polyvinyl chloride (PVC). In Nov. 2001, Relianc e Industries sold its just over 10% equity stake in Larsen & Toubro, the second largest player in the cement industry, to Grasim Industries for Rs 766.5 crore. The divestment of the L&T stake is in consonance with its declared objectives of 29

unlocking value from its investments, in the interests of maximising overall sha reholder value. 2002 In Jan. 2002, Reliance Petroinvestments has become a subsid iary of the company, while Reliance Life Insurance Company and Reliance General Insurance Company have ceased to be subsidiaries of the company. In March 2002, the Board approved the proposal for amalgamation of Reliance Petroleum Limited ( RPL) with the Company. The proposed Scheme of Amalgamation provides that the ama lgamation will take effect from the Appointed Date i.e. April 1, 2001. All asset s,liabilities and obligations of RPL will vest in the company w.e.f from the sai d appointed date. One equity share of the company will be allotted for every ele ven equity shares of RPL held. Shareholders of Reliance Petroleum Ltd on April 1 5 approved the merger of RPL with Reliance Industries Ltd at a meeting held in J amnagar and convened under the orders of the Gujarat High Court. Reliance Indust ries acquires 26% state & management control in Indian Petrochemicals Corporatio n Ltd. (IPCL) by paying Rs 1490.84 crore to Government of India.

2003 2002 Discovers fourth gas in KG-basin Unveils two improved lines of ac fibres Anil Ambani appointed as BSES MD Reduces stake in BSES from 55% to 49.5% and BSES ceases to be subsidiary of the company due to the disinvestment 30 Discovers gas it its offshore exploration in Gujarat Finds more gas in Block D6 in the deep waters of Krishna Godavari Basin Shuts down the aromatics plant at J amnagar, Gujarat Companys Hazira manufacturing unit gets IMC-Bajaj quality award

Revises reserves of gas in Krishna Godavari Basin to 10.45 trillion cubic feet S igns pact with Council of Scientific and Industrial Research (CSIR) to create br eakthrough technology in key areas from laboratory to commercial scale wherein t he company will be offered the first right to the IPR (intellectual property rig ht) for commercial development Ties up with DuPont Polyester Technologies (DPT) for the research and development (R&D) of the advanced polyester process and pro duct technologies in India Foreign Institutional Investors (FIIs) convert 24 mil lion shares of the company into Global Depository Receipts (GDRs) Strikes substa ntial gas reserves in Shahdol, Madhya Pradesh Shifts corporate headquarters from Maker Tower IV, in Nariman Point to Reliance Centre in Bellard Pier Oil discove red in RIL s exploration block 9 in Yemen in which the company holds 20% shares Global rating agency Moody s changes the outlook on debt securities of the compa ny from negative to stable Incidence of leakage in the FCC section of the compan y s refinery at Jamnagar, in the State of Gujarat Anil Ambani, Vice Chairman & M anading Director, voted as MTV Youth Icon of the Year Initiated the work on deep -water exploration block, KG-D6, in the Krishna-Godavari basin off the Andhra Pr adesh coast. RIL bags fourth slot among Top 10 in Asiamoney s corporate govern ance poll on Asian companies in the energy sector. And joined the club of a sele ct few Asian companies and is the only Indian private sector enterprise to find a place in the Top 5 in the energy sector category Mukesh Ambani, chairman and managing director (CMD), donates million to health programmes of the Internatio nal Federation of Red Cross (IFRC) and Red Crescent Societies Reliance exhorts N TPC Kayamkulam plant transplantation to Kakinada Reliance occupies top slot in o il exports 31

2004 Munich Re throws away Reinsurance JV program with RIL Reliance Industries A ssociate signs MOU with National Organic Chemicals Industries Limited (NOCIL) fo taking over its petrochemicals & plastic products division IPCL picks up gas fr om Petronet LNG Reliance Jamnagar refinery voted best among 50 refineries worldw ide Gujarat gives away Gujarat Garima Awards to Tata, Ambani Reliance Industries Limited (RIL) has increased the capacity of its Jamnagar refinery to 33 million tonnes from 30 million tonnes. Mukesh Ambani ranks 40th in the world business l eaders Reliance join hands with Gail for Indo-Iran natural gas pipeline project Reliance Industries, country largest private sector company, has surged ahead o f global players after it posted a net profit of more than billion in 2003-04. R eliance Industries Ltd has bagged a National Thermal Power Corporation (NTPC) or der to supply 3 million tonnes of natural gas per annum for the latter s propose d 1300-MW power stations at Kawas and Gandhar in Gujarat for seventeen years RIL chairman wins Asia Society Leadership award RIL, IOC inks deal for petro goods offtake Reliance Industries announced that it had acquired Trevira, a polyester company in Germany, for around Rs 440 crore (E80m), taking it closer to the posi tion of the world s largest polyester maker RIL appoints Parthiv Patel as sports executive Reliance Industries takes over NIS Sparta Reliance join hands with Te masek for 0 mn Power Fund Reliance picks up Nasscom IT Excellence Award RIL gets Petrochemicals Company of the Year award for 2004 32

2005 RIL partners with Vivada for sale of diesel to fishing trawlers and boats R eliance Industries Ltd was awarded the International Refiner of the Year 2005 at the World Refining and Fuels Conference s awards ceremony held in San Francis co on March 10, 2005. Reliance Industries wins annual 2005 ASTD Best Award fro m American Society for Training & Development Reliance Industries wins two Natio nal Energy Conservation awards Reliance Industries bags National Award for R&D Efforts in Industry RIL inks MoU with HSIDC for establish multi-product SEZ Reli ance Infocomm has joined hands with Vyjayanti Movies, the producers of Jai Chir anjeeva featuring Tollywood megastar Chiranjeevi, Sameera Reddy and Bhumika Cha wla.

2006 RIL inks marketing pact with Gulf Oil Reliance Industries has unveiled the much-talked about Reliance Fresh brand, the first format of the company s Rs 25, 000-crore retail initiative, here on October 29. 2007 Reliance inks JV with Yemen oil firm for refinery Gail India Ltd and Relian ce Industries Ltd (RIL) signing a Memorandum of Understanding (MoU) for cooperat ion in gas sector on March 15, 2007. Reliance Industries Ltd has appointed Dr. R A Mashelkar has been appointed as an Additional Director on the Company s Board . Reliance Industries Ltd has formed a 0 million joint-venture with Mammut Group of Dubai. Reliance signs agreement to acquire assets in Malaysia Consolidating global polyester vision. 33

RIL buys Malaysian based polyester firm. Reliance Industries Ltd has signed Tech nical Evaluation Agreement in 2005 which has been converted to Hydrocarbon Produ ction and Exploitation Contracts with Agenda Nacional de Hydrocarburos (ANH) of Colombia for two Offshore blocks, Borojo (pronounced as Boroho) North and Borojo South. 2008 Reliance Industries makes Another Gas Discovery in Shallow Water Block in t he Krishna Basin. RIL wins a Deep Water block in NELP VII Reliance Industries St rikes Eighth Gas Discovery in Block NEC - 25 in the Mahanadi Basin 2009 Reliance Industries has discovered natural gas reserves in a well drilled on its NEC-25 block in Mahanadi basin, off the Orissa coast. Reliance Industries has r aised around Rs 3,188 crore through sale of 1.50 crore equity shares of the comp any.

2010 Haryana Special Economic Zone (SEZ), Reliance Industries (RIL) has roped in a partner, in a bid to re-energize its dormant. RIL has bought around 3 mn barr els of spot crude from Brazilian company Petrobras. The delivery is expected in the next two months. The purchase was fuelled by lower freight rates and weaker US crude prices as compared to Europe. Reliance has bought a VLCC of Roncador He avy and Albacora crudes to be loaded this month, and a Suezmax of October-loadin g Marlin.

Sources:http://www.moneycontrol.com/company-facts/relianceindustries/history/RI4 th january,2011 34

Management of Reliance Industries Name Designation Mukesh D Ambani Chairman and Managing director Hital R Meswani Executive Director Pawan Kumar Kapil Executive Director Mansingh L Bhakta Non Ex ecutive Director Dharam Vir Kapur Non Executive Director Ashok Misra Non Executi ve Director Raghunath A Mashelkar Non Executive Director Nikhil R Meswani Execut ive Director P M S Prasad Executive Director Ramniklal H Ambani Non Executive Di rector Yogendra P Trivedi Non Executive Director Mahesh P Modi Non Executive Dir ector Dipak C Jain Non Executive Director Sources: http://www.moneycontrol.com/c ompany-management/relianceindustries/board-ofdirectors/RI4th January, 2011. Backward vertical integration Backward Vertical Integration is process by which a firm takes ownership or incr eased control of its supply systems. It serves to streamline the organization, t o provide better cost controls, and to eliminate the middleman. Because of effic iency and lowered costs of production it is possible for the firm to become more competitive in the marketplace. Vertical Integration is concerned with how much control a company has over its upstream supplier and downstream buyers. There a re three different varieties of Vertical Integration, backward vertical integrat ion which is upstream, forward vertical integration which is downstream and bala nced vertical integration which is a combination of both. A company uses Backwar d Vertical Integration when it controls subsidiaries that produce some of the in puts used to in the production of its products. A company uses Forward Vertical Integration when it controls distribution centres and retailers where its produc ts are sold. Balanced Vertical Integration means a firm controls all of the comp onents, from raw materials to final delivery. 35

Sources: http://www.indian-firms.com/reliance-group 2nd january2011 36

Organizational Structure of Reliance RelianceIndustries Limited Reliance Petroleum Limited Reliance Logistics Reliance Life Sciences Reliance Retail Limited Reliance Industrial Infrastructure Limited (RIIL) Figure 1 Reliance Major Subsidiaries

Reliance Petroleum Limited (RPL) was a subsidiary of Reliance Industries Limited (RIL) and was created to exploit the emerging opportunities, creating value in the refining sector worldwide.Currently, RPL stands amalgamated with RIL.[7] Rel iance Life Sciences is a research-driven, biotechnology-led, life sciences organ ization that participates in medical, plant and industrial biotechnology opportu nities. Specifically, these relate to Biopharmaceuticals, Pharmaceuticals, Clini cal Research Services, Regenerative Medicine, Molecular Medicine, Novel Therapeu tics, Biofuels, Plant Biotechnology and Industrial Biotechnology.[8] Reliance In dustrial Infrastructure Limited (RIIL) is engaged in the business of setting up / operating Industrial Infrastructure that also involves leasing and providing s ervices connected with computer software and data processing.[9] Reliance Logist ics (P) Limited is a single window solutions provider for transportation, distri bution, warehousing, logistics, and supply chain needs, supported by in house st ate of art telematics and telemetry solutions.[11] Reliance Clinical Research Se rvices (RCRS), a contract research organization (CRO) and wholly owned subsidiar y of Reliance Life Sciences, has been set up to provide clinical research servic es to pharmaceutical, biotechnology and medical device companies.[12]

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As far as Board structure of RIL is concerned there are 8 Non executive director s and four executive directors, hence RIL is strictly following suggestions give n by Kumar mangalam Birla committee regarding corporate governance. Figure 2 Reliance Board Structure Figure 3 Reliance Reporting Hierarchy 38

Functional structure Employees within the functional divisions of an organization tend to perform a s pecialized set of tasks, for instance the engineering department would be staffe d only with production engineers. This leads to operational efficiencies within that group. However it could also lead to a lack of communication between the fu nctional groups within an organization, making the organization slow and inflexi ble. As a whole, a functional organization is best suited as a producer of stand ardized goods and services at large volume and low cost. Coordination and specia lization of tasks are centralized in a functional structure, which makes produci ng a limited amount of products or services efficient and predictable. Moreover, efficiencies can further be realized as functional organizations integrate thei r activities vertically so that products are sold and distributed quickly and at low cost. For instance, a small business could start making the components it r equires for production of its products instead of procuring it from an external organization. But not only beneficial for organization but also for employees fa iths. Hence Reliance is Having Highest Operational efficiency as compared to com petitors. Management Style and Culture at Reliance Industries Limited Reliance Industries Limited (RIL) has emerged as India s largest private-sector enterprise and carved out a distinct place for itself in global Fortune 500 comp anies. Reliance s business success and competitive position reflect the leadersh ip provided by its founder, Mr. Dhirubhai Ambani who said, "Growth has no limit at Reliance. I keep revising my vision. Only when you dream it do you get it." T he leadership system defined by Ambani is based on value creation towards both i ts customers and stakeholders. The same vision has been taken up and forwarded b y his son Mr. Mukesh Ambani, current Chairman and Managing Director of RIL. Reli ance believes that any business conduct can be ethical only when it rests on the nine core values of Honesty, Integrity, Respect, Fairness, Purposefulness, Trus t, Responsibility, Citizenship and Caring. 39

The existence of the culture in RIL is driven towards achievement of excellence in systems, processes, technology and people and also toward the fulfillment of their corporate vision i.e. "To become a globally competitive enterprise, driven by the market, creating and maintaining a lead over competition through quality products and establishing itself to be the preferred supplier of its customers. " With the vertical integration of chain from refinery to textiles, RIL has uniq ue fully integrated structure. Basically it is a process centric organization th at maximized synergies across all interfaces, leverage core competencies of vari ous disciplines to maximize value from current assets and create growth opportun ities while allowing people to develop and contribute to their full capabilities . When we talk about the organization culture, specifically RIL focuses on high performance work culture which fosters innovation, entrepreneurship, inclusivene ss, teamwork and continuous improvements. Among all RIL basically focuses on inn ovation and has a innovative council for promoting the same. The company believe s that it is the innovation in thinking and execution that has made RIL reach wh ere it is today. The firm belief of innovation being the differentiator for futu re and the source of competitive advantage shows the importance that is given to it. RIL in the early 1990s did suffer from low employee participation in improv ement activities and low customer satisfaction. The introduction of various qual ity improvement tools in the facilities like the Total Quality Management( TQM), Kaizen Activities and customer focus approach led to the improvement in quality , productivity improvement and customer satisfaction in the organization. RIL re alizing the importance of human and intellectual capital for business success, h as given more importance to the use of its human potential and the creation of L earning organization to help in continued success in future. RIL in its importan ce to the health and safety also has also initiated Safety, Health and Workplace Environment Program (CASHe) which is an initiative to promote healthy workplace and reducing health and safety risk has been instrumental in creating a culture of implementing health, safety and environment project on a priority basis. Thi s program has also been able to improve the performance of the company on the oc cupational health and safety front. The Health and Safety Principles that were p ut forward in this regards to articulate the stakeholders expectation along with the existing values of the company underpin both the corporate culture and coop eration across the company. The growing importance of Corporate Governance by RI L shows its priority towards a transparent and accountable organization thus bei ng able to meet the needs of all the concerned stakeholders. The publication of annual corporate governance report is one important aspect showing its growing i nclination towards it and its aim to have fair and equitable treatment of its em ployees, shareholders, customers and investors. They aim to provide timely and b alanced disclosure of all material information concerned towards 40

stakeholders. Moreover they aim to have a sound system of risk management and in ternal control. The existence of code for board of directors and board committee s, code of business conduct and ethics for director/management personnel signifi es the existence of the culture driving the whole organization towards effective corporate governance. RIL has a long and strong tradition of supporting the lar ger communities that it connects with from education, health, drinking water, la rge-scale development of employable skills, to assistance during natural calamit ies such as earthquakes and cyclones. The Reliance Foundation would address soci al development imperatives of India, specifically quality, formal and vocational education, affordable high-quality health care, meaningful rural development an d urban renewal, and protection and promotion of India s priceless heritage of a rts and culture. Management in simple words are characteristic ways of making de cisions and relating to subordinates. Different management styles and employed b y different organizations depending on the prevailing culture, the nature of the business, the nature of the task and the personality and skills of the leaders. RIL is an organization which is operation in multiple facets. They have multipl e manufacturing facilities at multiple locations where by dealing in different p roduct ranges. The supreme authority of the company is Board of Directors. But t hey have given much more independence to the individual units at different level to take decisions at their level. There is a good mix of corporate level strate gy (taking RIL as a whole which is set up by the BOD) as well as appropriate bus iness level and operational strategies at each segment as well as business units to accomplish the corporate level strategy. Every unit which is a part of RIL h as its own hierarchy, headed by the CEO or the President, but a more of a democr atic style of leadership is seen. Since they promote innovation and value their human capital they promote participative environment at different levels of mana gement to be able to make a better and informed decision. Empowering the employe es in RIL is relevant. However the level of decisions and intensity of problems are defined whereby decisions can be taken at particular level of management. 41

Management Control Systems Internal Controls RIL has a comprehensive system of internal controls to safegua rd the Companys assets against loss from unauthorized use and ensure proper autho rization of financial transactions. The Company has an exhaustive budgetary cont rol system to monitor all expenditures against approved budgets on an ongoing ba sis. The Companys accounting process is based on uniform accounting guideline tha t sets out accounting policies and significant processes and deadlines on a comp any wide basis. There are binding directives for internal reconciliations and ot her accounting operations. The Company maintains a system of internal controls d esigned to provide a high degree of assurance regarding the effectiveness and ef ficiency of operations, the reliability of financial controls, and compliance wi th laws and regulations. RIL has well established policy towards maintaining the highest standards of health, safety and environmental norms while maintaining o perational integrity. This policy is strictly adhered to all RIL manufacturing f acilities. The Company has an internal audit function, which is empowered to exa mine the adequacy and compliance with policies, plans and statutory requirements . It is also responsible for assessing and improving the effectiveness of risk m anagement, control and governance process. The management duly considers and tak es appropriate action on the recommendations made by the statutory auditors, int ernal auditors and the independent Audit Committee of the Board of Directors. Internal Checks and Balances. At the heart of our processes is the wide use of technology that ensures robustn ess and integrity of financial reporting. Reliance deploys a robust system of in ternal controls to allow optimal use and protection of assets, facilitate accura te and timely compilation of financial statements and management reports and ens ure compliance with statutory laws, regulations and company policies. 42

Audit committee Powers of the Audit Committee: 1. To investigate any activity within its terms o f reference. 2. To seek information from any employee. 3. To obtain outside lega l or other professional advice. 4. To secure attendance of outsiders with releva nt expertise, if it considers necessary The role of the Audit Committee includes: 1. Oversight of the Companys financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible. 2. Recommending to the Board, the appointment, reappointment and, if required, the replacement o r removal of Statutory Auditors and fixation of audit fees. 3. Approval of payme nt to Statutory Auditors for any other services rendered by the Statutory Audito rs. 4. Reviewing with the management, the annual financial statements before sub mission to the Board for approval, with particular reference to: Matters required to be included in the Directors Responsibility Statement to be i ncluded in the Directors Report in terms of sub- section (2AA) of Section 217 of the Companies Act, 1956. 43

Changes, if any, in accounting policies and practices and reasons for the same. Major accounting entries involving estimates based on the exercise of judgement by the management.

Significant adjustments made in the financial statements arising out of audit fi ndings.

Compliance with listing and other legal requirements relating to financial state ments.

Disclosure of related party transactions. Qualifications in draft audit report. 5. Reviewing with the management, the quarterly financial statements before subm ission to the Board for approval. 6. Reviewing with the management, the performa nce of Statutory and Internal Auditors, adequacy of internal control systems. 7. Reviewing the adequacy of internal audit function, if any, including the struct ure of the internal audit department, staffing and seniority of the official hea ding the department, reporting structure, coverage and frequency of internal aud it. 8. Discussion with Internal Auditors any significant findings and follow up thereon. 9. Reviewing the findings of any internal investigations by the Interna l Auditors into matters where there is suspected fraud or irregularity or a fail ure of internal control systems of a material nature and reporting the matter to the Board. 10. Discussion with Statutory Auditors before the audit commences, a bout the nature and scope of audit as well as post audit discussion to ascertain any area of concern. 44

11. To look into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of nonpayment of decla red dividends) and creditors. 12. To review the functioning of the Whistle Blowe r Mechanism. 13. Carrying out such other functions as may be specifically referr ed to the Committee by the Board of Directors and / or other Committees of Direc tors of the Company. 14. To review the following information : The management discussion and analysis of financial condition and results of ope rations;

Statement of significant related party transactions (as defined by the Audit Com mittee), submitted by management;

Management letters / letters of internal control weaknesses issued by the Statut ory Auditors;

Internal audit reports relating to internal control weaknesses; and The appointm ent, removal and terms of remuneration of Internal Auditors. 15. Reviewing the financial statements and in particular the investments made by the unlisted subsidiaries of Company. 16. Review of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.) Recommendation In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventor y and fixed assets and for the sale of goods and 45

services. During the course of our audit, we have not observed any continuing fa ilure to correct major weaknesses in internal control system. Sources:http://www .indiainfoline.com/Markets/Company/Fundamentals/ManagementDiscussions/Reliance-I ndustries-Ltd/500325 4th January, 2011 46

Financial Analysis Industry BSE Code Market Lot Diversified Business Group 500325 NSE Code 1 Ambani Group RELIANCE Chairman ISIN No Book Closure Mr. Mukesh Ambani INE002A01018 21/ 10/2010 D Face Value Rs. 10.00 Mar 10 Per share ratios Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) B ook value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs. ) Net operating income per share (Rs) Free reserves per share (Rs) Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjus ted cash margin (%) Adjusted return on net worth (%) Reported return on net wort h (%) Return on long term funds (%) Leverage ratios Long term debt / Equity Tota l debt/equity Owners fund as % of total source Fixed assets turnover ratio Mar Mar Mar Mar

46.91 79.00 49.64 81.74 7.00 91.64 392.51 419.43 587.37 378.21 15.57 10.43 8.44 13.29 11.95 12.64 11.71 0.45 0.48 67.25 0.94 100.13 133.14 97.28 130.29 13.00 153.47 727.66 802.54 902.02 704.28 17.01 13.35 10.65 14.58 13.76 13.36 11.34 0.59 0.64 60.77 1.01 93.80 127.14 133.86 167.20 13.00 154.32 542.74 548.73 920.48 520.59 16.76 13.14 14.45 13.73 17.28 24.66 17.18 0.35 0.46 68.38 1.29 87.29 121.84 85.71 120.26 11.00 146.44 439.57 458.61 801.57 416.90 18.26 13.95 1 0.64 15.13 19.85 19.49 19.83 0.32 0.45 68.76 1.13 65.37 89.78 65.08 89.49 10.00 103.76 9.73 10.24 580.39 301.36 17.87 13.67 11.13 15.35 20.17 20.08 18.88 0.36 0.48 67.37 0.95 47

09 08 07 06

Liquidity ratios Current ratio Current ratio (inc. st loans) Quick ratio Invento ry turnover ratio Payout ratios Dividend payout ratio (net profit) Dividend payo ut ratio (cash profit) Earning retention ratio Cash earnings retention ratio Cov erage ratios Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov.ratio (post tax) 1.29 1.11 0.76 8.29 14.97 9.09 84.16 90.60 2.42 16.08 14.37 1.23 1.08 0.90 12.92 14.49 10.82 85.92 89.41 3.53 14.58 12.56 1.39 1.01 0.93 10.57 9.80 7.85 86.01 89.68 1.97 19.95 21.90 1.17 0.77 0.68 10.65 13.75 9.80 86.50 90.33 1.64 16.06 13.90 1.15 0.83 0.67 9.60 17.52 12.74 82.56 87.30 1.75 16.84 14.95 73.86 5.85 38.10 95 .41 0.72 34.58 Component ratios Material cost component (% 80.00 76.98 73.86 72.32 earnings) Se lling cost Component 2.14 2.18 2.41 3.27 Exports as percent of total sales 53.46 61.22 56.80 52.40 Import comp. in raw mat. consumed 95.39 95.74 93.96 94.04 Lon g term assets / total Assets 0.71 0.74 0.69 0.73 Bonus component in equity capit al 64.47 30.61 33.14 34.57 (%) Sources: http://www.moneycontrol.com/india/stockp ricequote/refineries/relianceindustries/RI3rdjanuary, 2011 48

Liquidity Ratio The current ratio is a financial ratio that measures whether or not a firm has e nough resources to pay its debts over the next 12 months. It is expressed as fol low:= Current Ratio = 1.29 66,595.32 51,584.08 It is important to note that a very high ratio of current assets to current liab ilities may be indicative of slack management practices, as it might signal exce ssive inventories for the current requirement & poor credit management in terms of overextended accounts receivable. At the same time, the firm may not be makin g full use of its current borrowing capacity. Although there is no hard & fast r ule, conventionally, a current ratio of 2:1 is considered satisfactory. The logi cal underlying the conventional rule is that even with a drop out of 50% in the value of current assets, a firm can meet its obligations. Current Ratio 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Current ratio Year 1 1.29 2010 2 1.23 2009 3 1.39 2008 4 1.17 2007 5 1.15 2006 The current ratio of the company is 1.29:1 that is less than 1.5:1. From the gra ph we find that, from the last three years the current ratio first rises & then decline. So we can say that the companys short term financial position is not goo d. Axis Title 49

Quick Ratio:Quick ratio indicates whether the firm is in a position to pay its c urrent liabilites within a month or immediately. It is expressed as follows: Quick Ratio = Quick Asset Current Liabilities 39203.90 = 51,584.08 Quick ratio = 0.76 The acid test ratio is a rigorous of a firms ability to servic e short term liabilities. The usefulness of the ratio is the fact that it is wid ely accepted as the best available test of the liquidity position of the firm. T hat means the acid test ratio is superior to the current ratio. The interpretati on of the liquidity position of the firm needs modification in the light of the quick ratio. Generally speaking, an acid- test ratio of 1:1 is considered satisf actory as a firm can easily meet all current claims. Quick Ratio 2011 2010 2009 2008 2007 2006 2005 2004 2003 Quick ratio Year 1 0.76 2010 2 0.9 2009 3 0.93 2008 4 0.68 2007 5 0.67 2006 The quick ratio of the company is 0.76:1 which is less than 1:1. From the graph also we find that from the last three years the ratio first rise then decline. S o we can say that the company is not in the position to pay its current liabilit ies instantly. Axis Title 50

Activity Ratio Inventory Turnover Ratio:In business management, the Inventory turnover is an eq uation that measures the number of times inventory is sold or used over in a per iod such as a year. The equation equals the cost of goods sold divided by the av erage inventory. Inventory turnover is also known as inventory turns, stock turn over. = 125921 .54 15189 .57 Inventory Turnover Ratio= 8.29 A low turnover rate may point to overstocking, ob solescence, or deficiencies in the product line or marketing effort. However, in some instances a low rate may be appropriate, such as where higher inventory le vels occur in anticipation of rapidly rising prices or shortages. Inventory Turnover ratio 100% 100% 100% 99% 99% 99% Inventory turnover ratio Year 1 8.29 2010 2 12.92 200 9 3 10.57 2008 4 10.65 2007 5 9.6 2006 51

The Inventory Turnover ratio of the company is 8.29. From the graph we find that from the last three years the ratio is increasing but this year the ratio is ne gative in comparison of last year. It is a not good sign for the company. From t he graph we can say that the management is not its using the stock efficiently. Fixed Assets Turnover Ratio:Fixed Assets Turnover Ratio= COGS Net Fixed Asset = 125921.54 133959.09 Net Fixed Assets = Fixed Assets - Deprecation Fixed Assets Turnover Ratio = 0.94 This ratio is of particular importance in man ufacturing concerns where the investment in fixed assets is quite high. This rat io reveals how efficiently the fixed assets are being utilized. Compare with the previous year, if there is increase in this ratio, it will indicate that there is better utilization of fixed assets. If there is a fall in the ratio, it will show that fixed assets have not been used as efficiently, as they have been used in the previous year. Inventory turnover ratio 100% Axis Title 100% 1 Fixed assets turnover ratio Year 0.94 2010 2 1.01 2009 3 1.29 2008 4 1.13 2007 5 0.95 2006 52

From the graph we find that, from the last three years the ratio had first incre ase then decrease. So we can say that the company is not using its assets proper ly

Profitability Ratio or Income Ratio Profitability Ratios based on sales:Gross Profit Ratio: Gross Profit Remember: Turnover = Sales Gross Profit = Turnover - Cost of Sales Gross Profit Ratio = 10.43 The gross profit margin ratio tells us the profit a business makes on its cost of sales, or cost of goods sold. It is a very simple idea and it te lls us how much gross profit per turnover our business is earning. = 2008400 192 461 Here are a few examples of the gross profit margins from different businesses or Reliance Leisure International Manufacturer Retailer Discount Refining Pizza & Hotels Gross profit 9.64% 5.62% 35.14% 11.41% 27.46% 11.99% 47.52% 89.55% Airlin e Airline Accounting Restaurants Software 53

Gross profit Accounting Software 38% Pizza Restaurants 20% Leisure & International Hotels Airline 4% 2% Manufacturer 15% Retailer 5% Discount Airline 11% Refining 5% Gross Profit Margin 100% 100% Axis Title 100% 99% 99% 99% 99% Gross profit margin (%) Year 1 10.43 2 010 2 13.35 2009 3 13.14 2008 4 13.95 2007 5 13.67 2006 The Gross Profit ratio of the company is 10.43. From the graph we find that, fro m the last three years the ratio first decrease then increase but this year rati o was decrease that mean company is not making it sales quickly compare to last year. So we can say that the company is not doing well this year. 54

Net Profit Ratio Net Profit Margin = 100 = 16236 192461 X100 Remember: Net Profit = Gross Profit - Expenses Net Profit ratio= 8.44 The net pr ofit margin ratio tells us the amount of net profit over turnover of a business has earned. That is, after taking account of the cost of sales, the administrati on costs, the selling and distributions costs and all other costs, the net profi t is the profit that is left, out of which they will pay interest, tax, dividend s and so on. Here are a few examples of the net profit margins from the same bus inesses we saw in the gross profit margin section: Leisu Hotel s Net Prof it Internation Manufacturer Retailer Discount Airline Refining Pizza Restaura nts Accounti ng Software 27.15% re & al Airline 7.36% 4.05% 10.48% 1.63% 10.87% 12.63% 7.55% 55

Leisure & International Hotels, 7.36% Airline, 4.05% Accounting Software, 27.15 % Manufacturer, 10.48% Refining, 12.63 % Pizza Restaurants, 7.5 5% Retailer, 1.63% Discount Airline, 10.87% Net Profit Margin 2025 2020 Axis Title 2015 2010 2005 2000 1995 Net profit margin (%) Year 1 8.44 2010 2 10.65 2009 3 14.45 2008 4 10.64 2007 5 11.13 2006 A high net profit margin would ensure adequate return to the owners as well as e nable a firm to withstand adverse economic conditions when selling price is decl ine, cost of production is rising & demand for the product is falling. A low net profit margin has the opposite implications. However, a firm with a low margin can earn a high rate of return on investments if it has a high inventory turnove r. The net profit ratio of the company is 8.44%. From the graph we also find tha t, from the last three years the net profit ratio first rise then decline but co mpany has a high inventory turnover ratio. So we can say that the company is in a good position but not earning profit comparing to last year. 56

Operating Ratio:This ratio measures the proportion of an enterprises cost of sale s and operating expenses in comparison to its sales: Operating Ratio = + = 29,969.07 100 192461 100

Operating ratio = 15.57% Operating ratio & operating profit ratio are inter related. Total of both these rat ios will be 100. A rise in Operating Ratio will lead to a similar amount of declin e in Operating Profit Ratio & vice versa. Operating ratio is a measurement of the efficiency and profitability of the business enterprise. The ratio indicates the extent of sales that is absorbed by the cost of goods sold and operating expens es. Lower the operating ratio, the better it is, because it will leave higher ma rgin of profit on sales. Operating Margin 100% 100% 100% 99% 99% 99% 99% 99% Operating margin (%) Year 1 15.57 2010 2 17.0 1 2009 3 16.76 2008 4 18.26 2007 5 17.87 2006 Axis Title 57

The operating ratio of the company is 15.57. From the graph we find that, from t he last years the ratio decline. So the companys operating profit ratio is less f rom the last year because its operating ratio decrease. So we can say that compan y is in a good position. Profitability Ratios based on Investment:Earnings Per Share:This ratio can be ex pressed as follows: EPS = . = EPS = 49.64 16,235.67 32,703.74 EPS is a widely used ratio. Yet, EPS as a measure of profitability of a firm fro m the owners point of view should be used cautiously as it does not recognize the effect of increase retention of earnings. It does not necessarily follow that t he firms profitability has improved because the increased profits to the owners m ay be the effect of an enlarged equity capital as a result of profit retentions, though the number of ordinary shares outstanding still remains constant. EPS 100% 98% Axis Title 96% 94% 92% 90% Reported EPS (Rs) Year 1 49.64 2010 2 97.28 2009 3 133.86 2008 4 85.71 2007 5 65.08 2006 58

As a profitability ratio, the EPS can be used to draw inferences on the basis of (i) its trends over a period of time (ii) comparison with the EPS of other firm s & (iii) comparison with the industry average. From the graph we found that the profit available to the equity shareholders on a per share basic is going down. Dividend per Share:Dividend per Share is the dividend paid to the shareholders o n a per share basis. In other words, DPS is the net distributed profit belonging to the shareholders dividend by the number of ordinary shares outstanding. That is: DPS = . = 228926.18 32,703.74 DPS = 7.00 DPS 100% 100% Axis Title 100% 99% 99% 99% Dividend per share Year 1 7 2010 2 13 2009 3 13 2008 4 11 2007 5 10 2006 59

The Dividend per Share would be a better indicator than Earning per Share. Like the earning per share, the dividend per share also should not be taken at its fa ce value as the increased dividend per share may not be a reliable measure of pr ofitability as the equity base may have increased retention without any change i n the number of outstanding shares. From the graph we found that from the last t hree years the DPS first increase then since last two years the dividend per sha re is constant but in the current year the dividend is decrease so there is less return to shareholders so it is not good sign for company. Leverage or Capital Structure Ratio Debt Equity Ratio:The D/E ratio is an important tool of financial analysis to ap praise the financial structure of a firm. It has important implication from the view-point of the creditors, owners & the firm itself. The ratio reflects the re lative contribution of creditors & owners of business in its financing. A high r atio shows a large share of financing by the creditors of the firm; a low ratio implies a smaller claim of creditors. The D/E ratio indicates the margin of safe ty to the creditors. = 62494 .69 137170 .61 D/E Ratio = 0.45 D/E Ratio 100% Axis Title 100% Long term debt / Equity Year 1 0.45 2010 2 0.59 2009 3 0.35 2008 4 0.32 200 7 5 0.36 2006 60 =

If the D/E ratio is high, the owners are putting up relatively less money of the ir own. It is danger signal for the creditors. A high debt equity ratio has equa lly serious implications from the firms point of view also. A high proportion of debt in the capital structure would lead to inflexibility in the operations of t he firm as creditors would exercise pressure & interfere in management. A low de bt equity ratio has just the opposite implications. To the creditors, a relative ly high stake of the owners implies sufficient safety margin & substantial prote ction against shrinkage in assets. From the graph we find that, from the last th ree years th debt equity ratio is increasing but this year it was slightly decre ase means there is 4.5:5.5 proportion of share. Sources: Annual Report of Reliance Industries 2008 09 10 from reliance website w ww.ril.com www.moneycontrol.com 61

Comparative Analysis of RIL Today Reliance Industries Ltd. Sensex NIFTY 1.27% 0.56% 0.64% 1 Month 3 1 Year 3 Years Months 4.07% 9.25% 10.38% 13.37% 17.17% 13.50% 18.60% 14.08% 16.06% 20.08 % 11.29% 11.34% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% NIFTY Sensex Reliance Industries Ltd. Competitive Analysis Companies RIL IOC Essar Oil HPCL Chennai petro Market capitalization (in mn.) 32 92097.95 1015004.5 180268.06 173732.71 38248.3 P/E 18.92 32.23 47.54 14.1 15.7 3 P/BV 2.33 1.42 5.67 1.82 1.47 Div(%) 70% 130% 0 120% 120% ROA (%) 9.50% 3.70% 2.90% 5.40% 8% RONW(%) ROCE(%) 11.80% 5.80% 12.50% 5.40% 13.20% 13.30% 9.60% 4.50% 8.80% 9.90% 62

100% 80% 60% 38248.3 173732.71 180268.06 1015004.5

15.73 40% 20% 18.92 0% 20% 40% 60% 47.54 14.1 3292097.95 32.23 5.67 120% 0 130% 1.42 2.33 RIL IOC Essar Oil HPCL Chennai petro Competitive Analysis of cash Flow statement : ( in crores ) Essar Oil Mar 10 BPCL Mar 09 Net Profit Before Tax Net Cash From Operating Activities Net Cash ( used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equival ents Closing Cash & Cash Equivalents 12 mths MRPL Mar 10 IOC Mar 10 12 mths Reliance Mar

10 12 mths

12 mths 12 mths 1017.57 6212.34 9908.75 2285.32 5981.73 11139.67 28.58 1691.85 14106.09 20547.44 688.65 2723.53 2075.47 1883.33 1411.1 645.22 24 .28 194.98 190.7 1761.61 464.7 20490.22 4676.1 18204.5 3694.23 10999.6 517.1 7 8713.88 798.02 22176.53 63

1.47 1.82 120% 5.40% 2.90% 3.70% 9.50% 70% % 8.80% 4.50% 9.60% 13.30% 9.90%

8% 5.40% 5.80% 11.80% 12.50% 13.20

IOC Mar 10 BPCL Mar

10

Essar Oil Mar 10 HPCL Mar

10

Sources Of Funds Total Share Capital Equity Share Capital Share Application Mone y Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 3,270.37 2,427.95 3,270.37 2,427.95 0 0 0 0 125,095.97 48,124.98 8,804.27 0 137, 170.61 50,552.93 11,670.50 18,292.45 50,824.19 26,273.80 62,494.69 44,566.25 199 ,665.30 95,119.18 Reliance Mar 10 IOC Mar 10 361.54 361.54 0 0 12,725.17 0 13,086.71 10,443.87 11,751.33 22,195.20 35,281.91 BPCL Mar 10 1,218.13 1,218.13 1,153.21 0 2,302.31 0 4,673.65 9,470.59 883.14 10,353.73 15,02 7.38 Essar Oil Mar 10 339.01 339.01 0 0 11,218.96 0 11,557.97 1,375.88 19,926.49 21,302.37 32,860.34 H PCL Mar 10 Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Wor k in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Def fered Credit Current Liabilities Provisions Total CL & Provisions 215,864.71 71,780.60 62,604.82 30,199.53 153,259.89 41,581.07 12,138.82 21,268.6 3 19,255.35 22,370.25 26,981.62 36,404.08 11,660.21 5,799.28 362.36 1,315.11 39, 004.19 43,518.47 10,517.57 15,870.43 17,073.56 0 66,595.32 59,388.90 0 0 48,018. 65 39,236.28 3,565.43 10,271.56 51,584.08 49,507.84 64 25,412.52 11,743.17 13,669.35 2,517.75 12,201.32 12,028.86 2,662.68 342.36 15,03 3.90 9,850.04 0 24,883.94 0 15,409.86 2,580.59 17,990.45 13,802.50 1,493.15 12,309.35 4,318.75 203 3,969.44 2,033.30 1,350.75 7,353.49 1, 025.94 0 8,379.43 0 10,160.34 22.81 10,183.15 24,988.37 9,681.70 15,306.67 3,887.59 11,387.22 12,579.22 2,437.34 243.17 15,259 .73 5,382.21 0 20,641.94 0 16,257.87 2,105.21 18,363.08

Balance Sheet Comparisons : ( in cores ) Balance Sheet ( in crores ) Reliance Mar

10

Net Current Assets Miscellaneous Expenses Total Assets 15,011.24 9,881.06 0 18.17 199,665.30 95,119.18 6,893.49 0 35,281.91 1,803.72 0 15,027.38

2,278.86 0 32,860.34 Contingent Liabilities Book Value (Rs) 25,531.21 392.51 23,586.81 208.21 5,682.54 361.97 22,091.84 29.3 4,598.74 341.32 65

Cash Flow of Reliance Industries Particulars Mar 10 Mar 09 Mar 08 Mar 07 Mar 06 Profit Before Tax 20,547.44 18,433.23 23,010.14 14,520.47 10,704.06 Net Cash Flo ws from Operating 20,490.22 18,245.86 17,426.74 16,870.55 10,301.58 Activity Net Cash Used in Investing 18,204.50 24,084.20 23,955.08 18,567.01 12,130.88 A ctivity Net Cash Used in Financing 10,999.60 23,732.58 8,973.04 306.08 366.67 A ctivity Net Inc/Dec in Cash and Cash 8,713.88 17,894.24 2,444.70 1,390.38 1,4 62.63 Equivalent Cash and Cash Equivalent 22,176.53 4,282.29 1,835.35 3,225.73 3 ,608.79 Beginning of the Year Cash and Equivalent End of the 13,462.65 22,176. 53 4,280.05 1,835.35 2,146.16 Year Sources: http://www.moneycontrol.com/financia ls/relianceindustries/cash flow/RI 4th january, 2011 Analysis of the cash flow Analysis of 2009 10 follows. (A) Operating activities Entire cash flows of RIL d uring 2009 10 have been contributed by operating activates. This typically indic ates a very strong cash position. RIL had a very high cash inflow on account of provisions for contingencies, sale, and depreciation. This is indicates high hid den reserves and very favourable cash position. RIL had a net cash inflow in res pect of working capital. This typically indicates an efficient management of wor king capital (B) Investing activities: 66

RIL had a net cash outflow for fixed assets.

This indicates RIL is purchasing more fixed assets. In general, this is an indic ation of expanding business. Fixed assets are income producing assets, which are expected to produce higher future revenues. RIL had significant outflow towards investment. It indicates a favorable cash position. (C)Financing Activities: RI L had a substantial net inflow from borrowings. It is, however, not clear whethe r the inflow was on account of long term debt or working capital financing. The analyst, therefore, needs to look at the schedules of loans in the balance sheet . Clear disclosure is required to facilitate analysis. (It is on account of work ing capital as per the schedule.) RILs dividend and dividend tax outflow at Rs.2, 219.45 crore against net cash inflow from operating activities at Rs. 20,490.22 crore is to high 10.83%. Seen the background of net outflow into fixed assets of Rs.21,829.48 crore only this typically shows that the management has no aggress ive growth plans on the anvil, just normal plans. This typically means that cash inflow from operations in future will have only steady growth, unless the compa ny reverses its policy of aggressive dividend payouts. RILs financing activities reflect a favorable cash position in the sense that there is a net outflow despi te outflow into fixed assets. (D) Quality of cash position: The information prov ided by the cash flow statement of RIL appears to indicate a high quality of cas h position. The reasons are simple and more than clear. It has been generating c ash from operating activities and utilizing this money in expanding it business and paying dividends. (E) Ability to generate positive cash flow from operations in future: RIL has ge nerated cash from operations in both the years. The amount, thought increased th is year, is more or less the same as last year. Information provided by its cash flow statement establishes its ability to generate steady positive cash flows f rom operations in future. It appears from this information, and as supported by the balance sheet, that RILs debts are not high in comparison to its size. Theref ore, it is in a very comfortable position to meet its obligations towards lender s as well as shareholders 67

Accounting System The accounting system at Reliance Industries Limited is SAP oriented. Each and e very transaction is done through SAP. The important Accounting Policies are as u nder: The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and th e provisions of the Companies Act, 1956. Fixed Assets are stated at cost, less a ccumulated depreciation including impairment loss. Depreciation on fixed assets is provided on straight line method at the rate prescribed in the Companies Act, 1956. Transactions denominated in foreign currencies are normally recorded at t he exchange rate prevailing at the time of the transaction. Long term investment s are stated at cost. Items of inventories are measured at lower of cost or net realizable value. Cost of inventory comprises of all cost of purchase, cost of c onversion and other cost incurred in bringing them to their respective present l ocation and condition. By products are valued at net realizable value. Turnover includes sale of goods, services, excise duty and sales during trial run period. Companys contribution to provident fund, family pension and gratuity and leave e ncashment benefits are charged to Profit and Loss Account. Compensation to emplo yees who have opted for retirement under the voluntary retirement scheme of the company is charged off to Profit and Loss Account. Premium on redemption of bond s / debentures are adjusted against the Securities Premium Account. An asset is treated as impaired when the carrying cost assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in whi ch an asset is identified as impaired. All the account handling by SAP program, cash management, payment, budget all the items are recorded in SAP program and e valuate. Communication and coordination Coordination and communication is central to the very existence of organizations . Specific management communication within the organization is necessary for coo rdination Reliance focuses on building life long relationships with its stakehol ders and believes it is important to understand their concerns and perception. F or this it has initiated a sharper and more focused dialogue with key stakeholde rs, which involved shareholders, customers, suppliers, employees, regulatory aut horities, local community, trade unions, NGOs and 68

contractors. Acting upon the feedback, it has restructured the processes to addr ess their concerns better and design programmes that would enhance their quality of life. The Board of Directors determines strategic business imperatives and m entors the achievement of reliance corporate goals. It executes its role in corp orate governance through regular reviews of Reliances financial performance and c ritical business issues. The quarterly and yearly financial results are sent to the Stock Exchanges immediately after the Board approves the same. These results are also published in various magazines, newspapers etc In order to provide bet ter communication and coordination Reliance organizes different meetings for the following: Shareholders

Customers Market Research External Customer Satisfaction Survey

Employees Feedback mechanism Employees Suggestion Scheme Awards for best Case studies for Internal Learning QUEST , Peer Group Sharing HSE Committees Toolbox Ta lks Self Development Modules ILNA (Individual Learning Needs Assessment) Career progression / job rotation / role diversification 69

Annual General Meetings (AGMs) Open forum

Shareholders grievance meetings

One to one meeting

Suppliers Separate Contractors Cell Monthly Contractors Safety Meetings

Regulatory Authorities Maintaining and updating all records Support to local authorities in times of cr isis Supporting neighboring industries through local associations 70

Business Dialogue

shop floor communication meet

In house newsletters

Conclusion Indian economy is growing at an impressive rate of over 8% and is likely to cont inue growing at this rate in the coming years. The growth has also accelerated t he energy demand of the country, which has created new opportunities for the com pany in the Refining and Marketing and Exploration and Production segments. Further, with the Indian Retail industry expected to grow at a CAGR of 40%, RILs foray in to retail is likely to provide huge addition to sales volume. Currently, the com pany derives close to 98% of its sales revenue from refining and petrochemical s egment, but E&P and Retail segments share is expected to increase at a tremendou s pace. Reliances efficient business model, strong market share across all operat ing segments, strong execution capabilities, presence in high growth business ar eas, and strong fundamentals, all indicate towards potential gains in investor n et worth. Based on Seat of the Plant and relative valuation I value RIL at Rs. 2 ,035 per share for FY10. From the given financial analysis it show that company is will grow its retail and refining tremendously because Mukesh Ambani is more focus on the Backward Vertical Integration by remove the middle man from the bus iness which give higher return in the future, because this two sector are interr elated with its whole business. 71

Bibliography 1. http://www.moneycontrol.com/financials/relianceindustries/cash flow/RI 4th ja nuary, 2011 2. Annual Report of Reliance Industries 2008 09 10 from reliance web site 3. www.ril.com 4. www.moneycontrol.com 5. http://www.moneycontrol.com/india /stockpricequote/refineries/relianceindustries/RI3rdjanuary, 2011 6. http://www. indiainfoline.com/Markets/Company/Fundamentals/ManagementDiscussions/Reliance In dustries Ltd/500325 4th January, 2011 7. http://www.indian firms.com/reliance gr oup 2nd january2011 8. http://www.moneycontrol.com/company management/reliancein dustries/board ofdirectors/RI4th January, 2011. 9. http://www.moneycontrol.com/c ompany facts/relianceindustries/history/RI4th january,2011 10. http://www.ril.co m/html/aboutus/aboutus.html 4th January 2011 11. www.bseindia.com 3rd January,20 11 72