RELIANCE PETROLEUM LIMITED

1

Contents
Company Information ..................................................................................................................................................... Directors’ Report ............................................................................................................................................................. Auditors’ Report on Financial Statements ...................................................................................................................... Balance Sheet .................................................................................................................................................................... Cash Flow Statement ........................................................................................................................................................ Schedules forming part of the Balance Sheet ................................................................................................................... Significant Accounting Policies and Notes on Accounts .................................................................................................. 1 2 4 8 9 10 12

Company Information
Board of Directors Mukesh D. Ambani - Chairman Hital R. Meswani Manoj H. Modi P. M .S. Prasad Yogendra P. Trivedi Mahesh P. Modi Atul S. Dayal Bobby K. Parikh Secretary K. Sethuraman Audit Committee Yogendra P. Trivedi - Chairman Mahesh P. Modi Bobby K. Parikh Shareholders’ / Investors’ Grievance Committee Yogendra P. Trivedi - Chairman Mahesh P. Modi Hital R. Meswani Auditors Deloitte Haskins & Sells Chaturvedi & Shah Registered Office Motikhavdi P.O Digvijayagram District Jamnagar – 361 140 Gujarat, India. Corporate Office 3rd Floor, Maker Chambers IV, 222 Nariman Point, Mumbai – 400 021. Maharashtra, India. Email: investor_relations@reliancepetroleum.com http://www.reliancepetroleum.com Registrar & Transfer Agents Karvy Computershare Private Limited 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034, India Tel +91 40 2332 0666, 2332 0711 2332 3031, 2332 3037 Fax +91 40 2332 3058 Email: rplinvestor@karvy.com http://www.karvy.com

2

Refining life. Redefining growth.

Director’s Report
Dear Shareholders, Your Directors are pleased to present the 1st Annual Report and the audited accounts of the Company for the period ended March 31, 2006. Promoter of the Company Your Company was initially promoted by Reliance Industries Limited (“RIL”) as its wholly owned subsidiary. RIL, Chevron India Holdings Pte. Ltd., Singapore (“Chevron”) and your Company on April 12, 2006 signed an agreement for purchase by Chevron 5 per cent equity share capital of the Company from RIL. Chevron has agreed to be and has been named as one of the Promoters of your Company along with RIL in the Prospectus issued for the Initial Public Offering (IPO) of the Company. Share Capital Since incorporation of the Company the build up of the paid up capital of the Company is as under. Date of Allotment December 6, 2005 January 30, 2006 February 25, 2006 April 3, 2006 April 12, 2006 No. of Equity Shares of Rs. 10 each 1,00,000 43,00,000 269,56,00,000 45,00,00,000 90,00,00,000 Cumulative Share Capital (Rs.) Remarks foreign currency term loans from Export Credit Agencies and rupee debt / bonds. Shifting of Registered Office of the Company The Registered Office of the Company has been shifted from the State of Maharashtra to the State of Gujarat with effect from March 29, 2006. Initial Public Offer of Equity Shares of the Company Your Company entered the capital market with an IPO of 135 crore equity shares of Rs.10 each for cash at a price band of Rs.57 - 62 per share through a 100 % book building process. Of this, 90 crore equity shares were reserved as promoter’s contribution and the net offer to the public was 45 crore equity shares of Rs.10 each. The issue was open for subscription / bids between April 13, 2006 and April 20, 2006. The IPO has received an overwhelming response with an oversubscription of about 52 times. The Company in consultation with Book Running Lead Managers (BRLMs) has finalised the issue price at Rs.60 per equity share. The book building was conducted using the facilities provided by Bombay Stock Exchange Limited and The National Stock Exchange of India Limited. The proceeds from the IPO will be used to partly finance the Company’s Project. Fixed Deposits The Company has not accepted any fixed deposits. Directors In terms of Article 128 of Articles of Association of the Company Shri Mukesh D. Ambani, Shri Manoj Modi and Shri P.M.S. Prasad are the first directors of the Company. The Board of Directors had appointed Shri Hital R. Meswani, Shri Y. P. Trivedi, Shri M. P. Modi, Shri Atul S. Dayal and Shri Bobby Parikh as Additional Directors on February 25, 2006. Members at the Extraordinary General Meeting held on March 3, 2006 appointed

10,00,000 Allotment to Subscribers to Memorandum of Association 4,40,00,000 Allotment to RIL 2700,00,00,000 Allotment to RIL 3150,00,00,000 Allotment to Pre-IPO Investors 4050,00,00,000 Allotment to RIL (forming part of Promoters Contribution) and the polypropylene plant in, or around, December 2008. Agreements have been entered into with Bechtel France S.A.S (“Bechtel”) to license the technology for the major process units of the refinery and polypropylene plant. Bechtel will also provide engineering, project management and other construction services for the Project. Your Company has already received environmental clearance from the Ministry of Environment and Forest and from the Pollution Control Board, Gujarat for setting up the project. The SEZ being developed by Reliance Infrastructure Limited, a subsidiary of RIL, has already been notified by the Government and the Company’s application for setting up the project as a unit in the SEZ is pending for approval. The Project cost is estimated at Rs.27,000 crore and is proposed to be financed by equity of Rs.11,250 crore and debt of Rs.15,750 crore. The debt is expected to be raised by foreign currency syndicated loan,

Operations – Implementation of the Project Your Company has been formed to set up a greenfield petroleum refinery and polypropylene plant (the “Project”) to be located in a Special Economic Zone (the “SEZ”) in Jamnagar in the State of Gujarat, Western India. The proposed refinery and polypropylene plant will be located adjacent to the existing refinery and petrochemical complexes of RIL. The refinery will have a complexity of 14.0, as measured using Nelson Complexity Index. The refinery will have a total atmospheric distillation capacity of approximately 580 kilo barrels of crude oil per stream day and also a 0.9 million tonnes per annum polypropylene plant. The refinery when constructed will be the sixth largest in the world based on current capacities. Your Company intends to complete construction and commission the refinery

RELIANCE PETROLEUM LIMITED

3

Shri Hital R. Meswani, Shri Y. P. Trivedi, Shri M. P. Modi, Shri Atul S. Dayal and Shri Bobby Parikh as directors liable to retire by rotation In terms of Article 155 of the Articles of Association, Shri Mukesh D. Ambani Shri Manoj Modi and Shri P.M.S. Prasad, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting. Directors’ Responsibility Statement Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, it is hereby confirmed that: (i) in the preparation of the annual accounts, the applicable accounting standards have been followed; the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2006;

(iv) the directors have prepared the annual accounts of the Company on a ‘going concern’ basis. Auditors and Auditors’ Report Messrs. Chaturvedi & Shah, Chartered Accountants and Messrs. Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The Company has received letters from them to the effect that their appointment / reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment / reappointment within the meaning of Section 226 of the said Act. The notes on accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further comments. Particulars of Employees The Company has not paid any remuneration attracting the provisions of the Companies (Particulars of Employees) Rules, 1975 read with Section 217(2A) of the Companies Act, 1956. Hence, no information is required to be appended to this report in this regard.

Energy Conservation, Technology Absorption and Foreign Exchange earnings and outgo The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure to this Report. Acknowledgment Your directors would like to thank the investing community including millions of retail shareholders for the immense faith reposed in your Company by making the IPO a resounding success. Your Directors would also like to express their grateful appreciation for the assistance and cooperation received from the Financial Institutions, Banks, Government Authorities, Vendors and Members during the year under review. For and on behalf of the Board of Directors

(ii)

(iii) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

Mukesh D. Ambani Chairman Place : Mumbai, April 25, 2006

Annexure to Directors’ Report
Particulars required under the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988: A. Conservation of Energy and Technology Absorption The Management of the Company gives due importance to the conservation of energy and absorption of the best technology for implementation of the Refinery project. However as the project of the Company is in the initial stages of its implementation there is nothing significant to be disclosed in this regard. B. Foreign Exchange Earning and Outgo Foreign Exchange Earned Foreign Exchange Used (On account of Capital Advances) NIL Rs. 1822,09,13,822/-

For and on behalf of the Board of Directors

Mukesh D. Ambani Chairman Place : Mumbai, April 25, 2006

4

Refining life. Redefining growth.

Auditors’ Report
To the Members of RELIANCE PETROLEUM LIMITED 1. We have audited the attached Balance Sheet of Reliance Petroleum Limited as at March 31, 2006 and Cash Flow statement for the period October 24, 2005 to March 31, 2006 annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. No profit and loss account has been prepared since the Company has yet to commence its revenue operations and the necessary details as per part II of Schedule VI of the Companies Act, 1956 have been disclosed in Schedule B as “Project Development Expenditure”. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: i) ii) iii) iv) v) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; The Balance Sheet and Cash Flow statement dealt with by this report are in agreement with the books of account; In our opinion, the Balance Sheet and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; On the basis of the written representations received from the directors as on March 31, 2006 and taken on record by the board of directors, we report none of the directors is disqualified as on March 31, 2006 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereto, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a) b) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2006; and In the case of the Cash Flow statement, of the cash flows for the period October 24, 2005 to March 31, 2006.

2.

3. 4.

vi)

For Deloitte Haskins & Sells Chartered Accountants

For Chaturvedi & Shah Chartered Accountants

P. R. Barpande Partner M. No.: 15291

Rajesh Chaturvedi Partner M. No.: 45882

Mumbai Dated: April 25, 2006

RELIANCE PETROLEUM LIMITED

5

Annexure to the Auditors’ Report
Referred to in Paragraph 3 of our report of even date

(i)

In respect of its fixed assets: The Company’s project for setting up refinery and polypropylene plant is at start up stage of construction period and expenditure incurred in relation to including advances are disclosed as Capital Work-inProgress. Accordingly, clause 4 (i) of the Companies (Auditor’s Report) Order, 2003 is not applicable.

(v)

According to the information and explanations given to us, there are no contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered in the register required to be maintained under that section. The Company has not accepted any deposits from the public during the period. The Company did not have the paid-up capital and reserves exceeding rupees fifty lakhs as at the commencement of the financial period nor does have any turnover in the first financial period and hence, the provisions of clause 4 (vii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company. According to the information and explanations given to us, the Company’s project for setting up refinery and polypropylene plant is at start up stage of construction and the Company has not commenced the commercial production and hence maintenance of cost records is not applicable during the period under audit. In respect of Statutory dues (a) According to the information and explanations given to us, the Company has no liability for undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Sales-tax, (b)

(vi)

Wealth Tax, Custom Duty, Excise Duty, cess and any other material statutory dues applicable to it other than Income tax and Service Tax, which has been generally regularly deposited with the appropriate authorities. According to the information and explanation given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax and Excise Duty, which have not been deposited on account of any dispute.

(ii)

In respect of its inventories: The Company does not have any inventory. Therefore the provisions of clause 4 (ii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

(vii)

(x)

(iii)

The Company has not granted or taken any loan secured/unsecured to/from companies, firms or parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clause 4 (iii) of the Companies (Auditor’s Report) Order, 2003 is not applicable to the Company. In our opinion, and according to the information and explanations given to us, there is an internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets. During the financial period, the Company did not undertake any activity of purchase of inventory and sale of goods and services. During the course of our audit, we have not observed any major weaknesses in the internal control system.

The Company has no accumulated losses at the end of the period under audit and it has not incurred any cash losses during the period. In our opinion and according to the information and explanations given to us, the Company has not borrowed any amounts from a financial institution or bank or by issue of debentures. Therefore, the provisions of clause 4 (xi) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company. According to the information and explanations given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities, hence the question of maintenance of adequate records for this purpose does not arise.

(viii)

(xi)

(iv)

(ix)

(xii)

6

Refining life. Redefining growth.

(xiii)

In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company. In our opinion and according to the information and explanations given to us, the Company have maintained proper records of transactions and contracts in respect of investments in mutual fund and certificate of deposits with banks and timely entries have been made therein. All the investments have been held by the Company in its own name. According to the information and

explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. (xvi) To the best of our knowledge and belief and according to the explanations given to us, in our opinion, no term loans have been availed by the Company. Therefore, the provisions of clause 4 (xvi) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956. (xix) According to the information and explanations given to us, the Company has not issued any debentures during the period under audit. According to the information and explanations given to us, the Company has not raised any monies by way of public issue during the period under audit. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the period under audit.

(xiv)

(xx)

(xv)

(xvii) According to information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, there are no funds raised on short term basis during the period of our audit and hence the question of using the same for long term investment doesn’t arise.

(xxi)

As per our Report of even date For Deloitte Haskins & Sells Chartered Accountants For Chaturvedi & Shah Chartered Accountants

P. R. Barpande Partner M. No.: 15291

Rajesh Chaturvedi Partner M. No.: 45882

Mumbai Dated : April 25, 2006

RELIANCE PETROLEUM LIMITED

7

Balance Sheet as at 31st March, 2006
Schedule SOURCES OF FUNDS Shareholders’ Funds Share Capital Share Application Money TOTAL APPLICATION OF FUNDS Fixed Assets Capital Work-in-Progress Investments Current Assets, Loans and Advances Current Assets Cash and Bank Balances Loans and Advances (In Rupees) As at 31st March, 2006

‘A’

2700 00 00 000 450 00 00 000 3150 00 00 000

‘B’ ‘C’ ‘D’ 450 96 17 284 ‘E’ 22 11 538 451 18 28 822

1903 61 38 232 798 52 63 389

Less : Current Liabilities and Provisions Current Liabilities Provisions

‘F’ 5 53 50 343 35 19 400 5 88 69 743

Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) (Refer Note 4 in Schedule ‘H’) TOTAL Significant Accounting Policies Notes on Accounts ‘G’ ‘H’

445 29 59 079 2 56 39 300

3150 00 00 000

As per our Report of even date For Deloitte Haskins & Sells Chartered Accountants For Chaturvedi & Shah Chartered Accountants

For and on behalf of the Board Mukesh D. Ambani Hital R. Meswani Manoj Modi P. M. S. Prasad Y. P. Trivedi M. P. Modi Atul S. Dayal K. Sethuraman Chairman

P. R. Barpande Partner

Rajesh Chaturvedi Partner

}
-

Directors

Company Secretary

Mumbai Dated : April 25, 2006

8

Refining life. Redefining growth.

Cash Flow Statement for the period 24th October, 2005 to 31st March, 2006
A B CASH FLOW FROM OPERATING ACTIVITIES: CASH FLOW FROM INVESTING ACTIVITIES: Capital Work-in-Progress Purchase of Current Investments Sale/ Redemption of Current Investments Interest on Current Investments Interest accrued on Fixed Deposits Advance Tax Paid Net Cash used in Investing Activities C CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issue of Equity Shares Share Application Money Received Miscellaneous Expenditure Net Cash generated from Financing Activities Net Increase in Cash and Cash Equivalents Opening Balance of Cash and Cash Equivalents Closing Balance of Cash and Cash Equivalents Notes: a. Cash and Cash Equivalents include: Cash and Bank Balances b. 2700 00 00 000 450 00 00 000 (2 55 29 100) 3147 44 70 900 450 96 17 284 450 96 17 284 (1899 81 26 564) (2003 87 17 500) 1206 85 22 150 2 86 000 41 83 459 ( 10 01 161) (2696 48 53 616) (In Rupees) -

450 96 17 284

The Cash Flow Statement has been prepared under the ‘Indirect Method’ set out in Accounting Standard 3 ‘Cash Flow Statement’ issued by the Institute of Chartered Accountants of India. This being the first reporting period, there are no corresponding previous year’s figures.

c.

As per our Report of even date For Deloitte Haskins & Sells Chartered Accountants P. R. Barpande Partner For Chaturvedi & Shah Chartered Accountants Rajesh Chaturvedi Partner

For and on behalf of the Board Mukesh D. Ambani Hital R. Meswani Manoj Modi P. M. S. Prasad Y. P. Trivedi M. P. Modi Atul S. Dayal K. Sethuraman Chairman

}
-

Directors

Company Secretary

Mumbai Dated : April 25, 2006

RELIANCE PETROLEUM LIMITED

9

Schedules forming part of the Balance Sheet
SCHEDULE ‘A’ (In Rupees) As at 31st March, 2006

SHARE CAPITAL Authorised: 1000 00 00 000 500 00 00 000 Equity Shares of Rs. 10 each Preference Shares of Rs. 10 each TOTAL Issued, Subscribed and Paid-up: 270 00 00 000 Equity Shares of Rs. 10 each fully paid-up TOTAL Notes: a. b. All the above Equity Shares are held by Reliance Industries Limited, the holding company, including six Equity Shares jointly held with six other individuals. Initial allotment of 10 00 000 Equity Shares to subscribers to the Memorandum of Association was of Re. 1 each. Subsequently, at the Extra Ordinary General Meeting held on 30th January, 2006, the Company consolidated the Share Capital from a face value of Re. 1 per share to Rs. 10 per share. (In Rupees) As at 31st March, 2006 2700 00 00 000 2700 00 00 000 10000 00 00 000 5000 00 00 000 15000 00 00 000

SCHEDULE ‘B’ CAPITAL WORK-IN-PROGRESS: Capital Advances Construction Material at Site Project Development Expenditure (Refer Note 2 in Schedule ‘H’) a. Payments to and Provisions for personnel on deputation b. Rates and Taxes c. Travelling Expenses d. Letter of Credit and Bank Charges e. Other Expenses (includes Sitting Fees of Rs.1 20 000 paid to Directors) Less: f. Dividend Income from Current Investments g. Profit on Sale of Current Investments h. Interest Received from Current Investments i. Interest accrued on Fixed Deposits (Gross, Tax Deducted at Source Rs. 12 10 377 ) Less: j. Provision for Current Tax

1897 09 13 822 6 22 322

5 21 06 20 4 12 2 52 71

458 180 016 548

40 20 361 8 18 30 563 1 05 14 739 45 53 300 2 86 000 53 93 836 2 07 47 875 35 19 400 1 72 28 475 6 46 02 088

TOTAL

1903 61 38 232

10

Refining life. Redefining growth.

Schedules forming part of the Balance Sheet
SCHEDULE ‘C’ INVESTMENTS Current Investments - Others Unquoted In Certificates of Deposit of Face value Nos. 2,500 2,000 30,000 2,500 3,500 4,000 9,500 7,500 1,500 2,500 10,000 7,500 In Units of Mutual Fund: In Units 1,25,70,217 of Rs. 1 00 000 each issued by: ABN Amro Bank Limited HDFC Bank Limited ICICI Bank Limited IDBI Bank Limited Jammu & Kashmir Bank Limited Karnataka Bank Limited State Bank of Bikaner and Jaipur State Bank of Indore State Bank of Patiala State Bank of Travancore Kotak Mahindra Bank Limited ING Vysya Bank Limited 23 19 282 24 33 38 89 70 14 23 93 72 46 31 49 18 75 76 31 35 38 93 41 55 97 83 75 98 77 72 61 03 33 64 06 75 750 600 500 000 800 400 500 000 650 000 000 450 785 95 48 650 (In Rupees) As at 31st March, 2006

Standard Chartered Liquidity Fund - Daily Dividend Plan of Rs. 10 each. TOTAL**

12 57 14 739 798 52 63 389 798 52 63 389 (In Rupees) Cost 99 19 19 104 9 98 14 19 72 92 92 11 91 76 70 27 97 32 71 90 37 28 03 08 500 600 800 150 000 000 600 200

Aggregate Value of Quoted Investments Unquoted Investments Movement during the period 24th October, 2005 to 31st March, 2006 Purchased and sold/ redeemed Nos. Certificates of Deposit of face value Rs. 1 00 000 issued by: Allahabad Bank American Express Bank Karnataka Bank Limited Jammu & Kashmir Bank Limited ING Vysya Bank Limited UTI Bank Limited ABN Amro Bank Limited Federal Bank Limited Units of Mutual Fund: Standard Chartered Liquidity Fund - Daily Dividend Plan of Rs. 10 each. Note: ** Includes Rs. 797 47 48 350 being balance of unutilised monies out of issue of Shares. 10,000 2,000 2,000 10,500 1,000 10,000 1,500 2,000 81,99,68,003

820 05 00 000

RELIANCE PETROLEUM LIMITED

11

Schedules forming part of the Balance Sheet
SCHEDULE ‘D’ CURRENT ASSETS Cash and Bank Balances ** Balance with Banks In Current Accounts with Scheduled Banks In Fixed Deposit with Scheduled Bank (including Interest accrued Rs.41 83 459, net of Tax Deducted at Source Rs.12 10 377) (In Rupees) As at 31st March, 2006

54 33 825 450 41 83 459

450 96 17 284 TOTAL Note: ** Includes Rs. 5 94 525 being balance of unutilised monies out of issue of Shares. 450 96 17 284

SCHEDULE ‘E’ LOANS AND ADVANCES UNSECURED - (Considered good) Advance Income Tax (including Tax Deducted at Source Rs.12 10 377) TOTAL

22 11 538 22 11 538

SCHEDULE ‘F’ CURRENT LIABILITIES AND PROVISIONS Current Liabilities: Sundry Creditors - Small Scale Industries Sundry Creditors - Others Other Liabilities Provisions Provision for Current Tax TOTAL

8 46 643 5 45 03 700 5 53 50 343 35 19 400 5 88 69 743

Significant Accounting Policies
SCHEDULE ‘G’ SIGNIFICANT ACCOUNTING POLICIES 1 Basis of Preparation of Financial Statements The Financial Statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956. 2 Use of Estimates The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

12

Refining life. Redefining growth.

3

Fixed Assets i) ii) iii) Fixed Assets are stated at cost net of CENVAT/ Value Added Tax, less accumulated depreciation, amortisation and impairment loss, if any. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to fixed assets are capitalised. Expenses incurred relating to project prior to commencement of commercial production are classified as Project Development Expenditure and disclosed under Capital Work-in-Progress (net of income earned during project development stage).

4

Foreign Currency Transactions i) ii) Transactions denominated in foreign currencies are normally recorded at the exchange rates prevailing at the time of the transaction. Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract. Non monetary foreign currency items are carried at cost. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss Account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

iii) iv)

5

Investments Current Investments are carried at lower of cost and quoted/fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

6

Borrowing Costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

7

Provision, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

8

Taxes on Income Provision for Income Tax is made on the basis of estimated taxable income for the year at current rates. Tax expense comprise both Current Tax and Deferred Tax at the applicable enacted or substantively enacted rates. Current Tax represents the amount of Income Tax payable/recoverable in respect of the taxable income/ loss for the reporting year. Deferred tax represents the effect of timing difference between taxable income and accounting income for the reporting year that originate in one year and are capable of reversal in one or more subsequent years.

Notes on Accounts
SCHEDULE ‘H’ 1 2 The Company was incorporated on 24th October, 2005 and accordingly the Accounts for the first reporting period are from 24th October, 2005 to 31st March, 2006. Hence there are no corresponding figures for the previous year. The Company is setting up a refinery and polypropylene plant (project) in a Special Economic Zone at Jamnagar, Gujarat. No Profit and Loss Account has been prepared since the project is at start up stage of construction and the Company has not commenced revenue operations. The expenditure incurred during the construction period are classified as ‘Project Development Expenditure’ pending capitalisation and will be apportioned to the Assets on the completion of the project. Necessary details as per part II of Schedule VI of the Companies Act, 1956 have been disclosed in Schedule ‘B’.

RELIANCE PETROLEUM LIMITED

13

SCHEDULE ‘H’ (Continued) 3 Payment to Auditors (including Service Tax): For the period 24th October, 2005 to 31st March, 2006 (In Rupees) Audit Fees For Audit of Interim Accounts Certification work 16 53 000 2 20 400 1 10 200 19 83 600 4 Miscellaneous Expenditure (to the extent not written off or adjusted) represents share issue expenses. Such expenditure would be adjusted against the Securities Premium Account as and when Shares are issued. Capital Commitments: Estimated amount of contracts remaining to be executed on capital accounts (net of advances) and not provided for 6 As at 31st March, 2006 (In Rupees) 15343 81 41 587

5

The Company’s activities during the period revolve around setting up of the project (Refer Note 2 above). Considering the nature of Company’s business and operations, there is/are no reportable segments (business and/ or geographical) in accordance with the requirements of Accounting Standard 17 - ‘Segment Reporting’, issued by the Institute of Chartered accountants of India (ICAI). The Company has temporarily parked its project surplus funds in Certificates of Deposit and in units of Mutual Fund. Such Investments are not intended to be held till maturity and hence are classified as Current Investments. These Investments would be encashed for requirement of funds for project execution. The profit/ loss on sale of these Current Investments would be accounted when sold. As per Accounting Standard 18 (AS-18) ‘Related Party Disclosures’, issued by ICAI, the disclosures of transactions with the related parties as defined in AS-18 are given below : (i) List of related parties and relationships: Sr. No. 1 2 3 4 5 (ii) Name of the Related Party Reliance Industries Limited Reliance Utilities and Power Limited Reliance Ports and Terminals Limited Shri Mukesh D. Ambani Shri P. M. S. Prasad Relationship Holding Company Associate Associate Key Management Personnel Key Management Personnel

7

8

Transactions during the period with Related Parties: (In Rupees) Sr No 1 2 3 4 Nature of Transactions (Excluding reimbursements) Share Capital Purchase of Investments (see note ‘a’ below) Corporate Guarantee to Banks given by (see note ‘b’ below) Sitting Fees paid to Sh. P. M. S. Prasad Holding Company 2700 00 00 000 1172 30 17 500 6573 28 05 942 Key Management Personnel 20 000 Total 2700 00 00 000 1172 30 17 500 6573 28 05 942 20 000

Note: a. b. Purchase of Investments from holding company was at Market rates. Corporate Guarantee to Banks represents utilised amount against a total Guarantee amount of Rs. 11300 00 00 000.

14

Refining life. Redefining growth.

9

Additional information as required under Part IV of Schedule VI to the Companies Act, 1956 Balance Sheet Abstract and Company’s General Business Profile:
I. Registration Details: Registration No. Balance Sheet Date: U 1 1 1 0 0 G J 2 0 0 5 P L C 4 8 0 3 0 3 1 - 0 3 - 2 0 0 6 State Code 0 4

II. Capital raised during the year: (Amount in Rs. Thousands ) Public Issue: Bonus Issue: Share Application Money: N I L N I L 4 5 0 0 0 0 0 Rights Issue: Private Placement: N I L 2 7 0 0 0 0 0 0

III. Position of mobilisation and deployment of funds: (Amount in Rs. Thousands ) Total Liabilities: Sources of Funds: Paid up Capital: Share Application Money: Reserves and Surplus: Secured Loans: Unsecured Loans: 2 7 0 0 0 0 0 0 4 5 0 0 0 0 0 N I L N I L N I L 3 1 5 5 8 8 7 0 Total Assets: Application of Funds: Net Fixed Assets: Investments: Net Current Assets: Miscellaneous Expenditure: Profit and Loss Account: 1 9 0 3 6 1 3 9 7 9 8 5 2 6 3 4 4 5 2 9 5 9 2 5 6 3 9 N A 3 1 5 5 8 8 7 0

IV. Performance of the Company: (Amount in Rs. Thousands ) Net Turnover: Profit / (-) Loss before tax: Earnings per Share in Rs: - Basic - Diluted V. Generic Names of principal products of the Company: Item Code number Product Description Item Code number Product Description B U L K 2 7 . 1 0 P R OD U C T S N A N A Dividend Rate: N A N A N A Total Expenditure: Profit / (-) Loss after tax: N A N A

P E TR OL E U M . 0 0

3 9 0 2 1 0

P O L Y P R O P Y L E N E

( P P )

For and on behalf of the Board Mukesh D. Ambani Hital R. Meswani Manoj Modi P. M. S. Prasad Y. P. Trivedi M. P. Modi Atul S. Dayal K. Sethuraman Mumbai Dated : April 25, 2006 Chairman

}
-

Directors

Company Secretary

RELIANCE PETROLEUM LIMITED

15

NOTES

16

Refining life. Redefining growth.

NOTES