A FINANCIAL ANALYSIS REPORT

RELIANCE
INDUSTRIES LTD.

Prepared by : Dhaval H. Devmurari
Roll No. : 15050 Div.-B
Submitted to : Dr. P.K.Priyan

G.H.Patel P.G Institute of Business management

Sardar Patel University V.V.Nagar

Batch: 2015-17

0

PREFACE

Financial management is the subject which teaches us about the
current scenarios which are prevailing in the industries and which
are helpful in understanding the Indian market. I got an opportunity
to analyze the financial reports of a large scale manufacturing
industry.
As a part of our MBA, we are assigned various projects under
different subjects to impart practical know-how of the industry.

This report is a study of RELIANCE INDUSTRIES LIMITED under
the subject Financial Management.

In this report I have compiled the information pertaining to
RELIANCE INDUSTRIES LIMITED’s Ratio Analysis, Cash-Flow-
Statement

1

we had learnt about the financial analysis of companies through ratio analysis. During our regular lectures. With the help of this study. GHPIBM for his moral support and encouragement for giving me this opportunity to carry out this analysis. I came to know about the actual financial position of a company. P. 2 .K. ACKNOWLEDGEMENT I would like to express my extreme gratitude to Dr. cash flow statement and so on. Professor and Faculty (MBA).Priyan.

.....23 BIBLIOGRAPHY4 3 ........ TABLE OF CONTENT INTRODUCTION OF A RELIANCE INDUSTRIES LIMITED ............4 RATIO ANALYSIS DU-PONT RATIO ANALYSIS ANALYSIS OF CASH-FLOW STATEMENT SUSTAINABLE GROWTH RATE..................................................

the company expanded its polyester yarn business by setting up a Polyester Filament Yarn Plant in Raigad. In 1998–99. S&P rated BB+. the name of the company was changed from Reliance Textiles Industries Ltd. In 1965. stable outlook. it became the first private sector company in India to be rated by international credit rating agencies. I. Reliance Textiles Industries Pvt. It established a synthetic fabrics mill in the same year at Naroda in Gujarat. The Hazira petrochemical plant was commissioned in 1991–92. the company expanded its installed capacity for producing polyester yarn by over 145. In 1993. with "Vimal" becoming its major brand in later years. the company expanded its business into textiles. USA and promoted Reliance Telecom Private Limited in India. Investment grade. During 1998–2000. RIL introduced packaged LPG in 15 kg cylinders under the brand name Reliance Gas. the 4 . The inc.INTRODUCTION OF RELIANCE INDUSTRIES LTD. a textiles company Sidhpur Mills was amalgamated with the company.In 1975. Maharashtra with financial and technical collaboration with E. In 1966. In 1996. During the years 1985 to 1992. Reliance turned to the overseas capital markets for funds through a global depositary issue of Reliance Petroleum. the partnership was ended and Dhirubhai continued the polyester business of the firm. In 1980. constrained by the sovereign ceiling.000 tonnes per annum. In the year 1995–96. Moody's rated Baa3. to Reliance Industries Ltd. US.was co-founded by Dhirubhai Ambani and his brother Champaklal Damani in 1960s as Reliance Commercial Corporation.[1] In 1979. The issue was over-subscribed by seven times. du Pont de Nemours & Co. The company held its Initial public offering (IPO) in 1977. Ltd was incorporated in Maharashtra. In 1985. constrained by the sovereign ceiling. the company entered the telecom industry through a joint venture with NYNEX..

refining. including airframe.company completed setup of integrated petrochemical complex at Jamnagar in Gujarat. equipment and components. retail business. RIL informed that it was going to invest US$1 billion over the next few years in its new aerospace division which will design. In 2012–13. helicopters. manufacture. avionics and accessories for military and civilian aircraft. In July 2012. Operations The company's petrochemicals. 2% from Oil & Gas and 3% from Other segments. 5 . and oil and gas- related operations form the core of its business. the company had 123 subsidiary companies and 10 associate companies. engine. develop. it earned 76% of its revenue from Refining. 19% from Petrochemicals. unmanned airborne vehicles and aerostats. radars. Major subsidiaries and associates On 31 March 2013. telecommunications and special economic zone (SEZ) development. other divisions of the company include cloth.

RATIO ANALYSIS  Ratio analysis is a powerful tool for the interpretation of the financial statement. is known as financial ratios. 2 Leverage Ratios – Measure the proportion of debt and equity in financing the assets.  The types of ratios 1 Liquidity Ratios – Measure the firm’s ability to meet current obligations. A ratio can be defined as “the indicated quotient of two mathematical expressions” in financial analysis the ratio is used as the benchmark for evaluating the financial position and performance of a firm. Activity Ratios – Measure the firm’s efficiency in utilizing its assets 6 . expressed mathematically. 3 Profitability Ratios – Measure overall performance and effectiveness of the firm.  The relation between two accounting figures.

31:1  It is still decreased in 2014 from1.31:1 to 1.LIQUIDITY RATIOS  There are two types of liquidity ratios 1 Current ratio = current assets/current liabilities 2 Quick ratio = (current assets-inventory)/ current liabilities 1) CURRENT RATIO:  In 2011 the current ratio was 1.61:1  If we see in overall 5 year data we can say that Reliance industries ltd’s current liability is more increase as compare to current asset level from 2012 to 2014 the current ratio continuous decreasing.42:1.14:1 in 2012 this ratio increasing from 1. 7 . in 2012 this ratio was 1.  In 2013 the current ratio decrease from 1.14:1 to 1.42:1 and in 2015 it was 0.12:1  In 2015 this ratio was 0.61:1  It nearly half in 2015 as compare to 2012.42:1 to 1.

88:1 to 0.2 0 2011 2012 2013 2014 2015 2) QUICK RATIO: Quick ratio = (current assets-inventory)/ current liabilities  In 2011 the Quick ratio was 0.77:1 to 0.88:1 but we seen in 2015 this ratio would be 0.8 0.58:1  In 2015 this ratio was 0.4 1.19:1  If we see in overall 5 year data we can say that Reliance industries ltd.2 1 0. quick ratio continuous decreasing from 2012 to 2015. in 2012 this ratio was 0.4 0.  In 2013 the Quick ratio decrease from 0.6 0.69:1 in 2012 this ratio increasing from 0.69:1 to 0.19:1 8 .88:1.77:1  It is still decreased in 2014 also from 0.6 1. Current Ratio 1.

5 0.46% in 2012 compare to 2011.  In earlier years company reduces the debt till 2013 but after the 2013 company increase the level of debt. Quick Ratio 1 0.38%  It is decreasing by 1.3 0.  It is further decreased by 1.9 0.  If we seen this five year ratio we can say that it is up down from 2011 to 2015 it was decreased.4 0.8 0.03% in the year of 2013  Then this ratio picked-up by 9.7 0.56% in the year of 2014  In the year of 2015 this ratio was 27.1 0 2011 2012 2013 2014 2015 LEVERAGE RATIO 1) DEBT/EQUITY RATIO:  The debt equity ratio of this company in 2011 19.1% compare to previous year 2014.6 0.55% it was increased by 1. then after this ratio was increasing till 2015.2 0. 9 .

00% 20. Debt-Equity Ratio 30.00% 0.00% 25.00% 15.00% 10.00% 2011 2012 2013 2014 2015 10 .00% 5.

4%  But this ratio was increase by 1.  In 2013 it was still decreased 0.31% in this year the ratio was 94.00% 95.50% 96.05%  In 2012 this ratio was 94.00% 93.00% 94.50% 93.50% 95.71% it was decreased by 0.00% 2011 2012 2013 2014 2015 11 .36%  This ratio was again increase in 2015 by 0.14% compare to previous year 2014  Here also this ratio was up-down in earlier stage it was decrease up to 2013 and then after it was increased.2) DEBT TO CAPITAL EMPLOYED RATIO: Debt / Debt + Equity  The debt to capital employed ratio of 2011 was 95.96% in the year of 2014 and the ratio was 96.50% 94.34% compare to 2011.  Which was highest in 2014 and 2015 Debt to Capital employed Ratio 97.00% 96.

45 % in 2015  This ratio was highest in the year of 2015 because of in this year the EBIT is higher compare to other years and also the interest would be lower compare to other years.  It was decrease in the year of 2012 by 1.00% 2. Coverage Ratio 16.68% in the year of 2014  It was increased in 2015 by 3.84% in the year of 2011.00% 2011 2012 2013 2014 2015 12 .00% 14.77% and the ratio was 13.00% 6.00% 8.00% 4.00% 12.00% 0.19%  It was again decrease by 1% in the year of 2013  This ratio was 9.00% 10. 3) COVERAGE RATIO: EBIT/ INTEREST  Coverage ratio was 11.

00% 2.00% 0. This was because of lower sales as compare to 2014.00% 2011 2012 2013 2014 2015 13 . PAT Margin was higher as compare to 2013. PAT Margin Ratio 9.1) PAT MARGIN RATIO:  During years 2014-2015 PAT Margin shows slight change. While In 2012.  In 2013 PAT Margin became little higher as compare to 2014.00% 7.63% & in 2015 it was to 6.00% 4.00% 3. but the profit change is little. this change was due to change in sales & operating expenses.  In the year 2011 PAT margin ratio was highest in compare to other years.00% 5.00% 8.00% 1.00% 6. In year 2014 PAT Margin was 5.9%.

00% 6.00% 0.15% to 10.59% as compare to 2013. here we can seen that the ROE is continue decrease.00% 2.00% 4. it was again decreased as compare to 2012  ROE was still decreasing in the year of 2014 by 0.00% 14.51%  It was happened that because of company continue to increase reserve and surplus that is the reason for decrease the ROE and the on other hand the PAT was increasing but slow rate.89% in the year of 2011  It was decrease in the year of 2012 by 1.59 % as compare to 2011  It was 11.00% 2011 2012 2013 2014 2015 14 .00% 12.74% in the year of 2013.00% 10. ROE 16.00% 8.ROE-RETURN ON EQUITY:  ROE is 13.  Even also in the year 2015 it was also decreased from 11.

79% because there was huge change in capital employed it was change from 57752 (2013) to 88713 (2014).  In this 5 year the ROI was up down from 2011 to 2013 it was shoot up.33% such a huge ROI we can say that.00% 40.33% to 45.90% to 50. followed by that in the year of 2014 and 2015 it was fall down.76% in the year of 2013.00% 50.00% 0.00% 2011 2012 2013 2014 2015 15 .  In 2015 the ROI again fall down by 0.51% due increase in capital employed.90%.00% 30.00% 10. ROI 60.  Again ROI shoot up from 45.  But it was collapse in the year 2014 by 15.00% 20. ROI ( Return on Investment ) = EBIT / CAPITAL EMPLOYED  The ROI of this company in the year 2011 was 41. while the EBIT change but lower rate as compare to capital employed.  It was increased in 2012 from 41.

49 times  It was again increased from 1.4 1. due to increasing the assets level.18 times in the year of 2011.4 0. Increase almost 1. EFFICIENCY RATIO ASSET-TURNOVER RATIO(ATR):  This ratio was 1.8 0.38 times it was decreased because of increasing the total asset.54 times to 1.54 times in the year of 2013  But this ratio was decreased in the year of 2014 from 1.38 times to 1.2 1 0.31times in the year of 2012 and ratio was 1.2 0 2011 2012 2013 2014 2015 16 .6 1.09.  Here huge changes in asset in the 2011 it was 2. And in 2015 it was 3.49 times to 1.510 cr.  It was increased by 0. from 2011 to 2015 ASSET TURN OVER RATIO 1.07 times.19.6 0.29.076 cr.8 1.566 cr.  Same things happen in the 2015 the ratio was down from 1.

5 2 1. F.33 times  It was increased by 0.A.09 time  But the ratio was starting the fall down in the year of 2014 it was fall down by 0. FIXED ASSET TURNOVER RATIO(FATR):  This ratio was up down during the year 2011 to 2015  In the year 2011 the ratio was 1.5 1 0.5 0 2011 2012 2013 2014 2015 17 .36 time  Again it was fall down in the year 2015 by 0.T.55 times because of sales was fall in the year of 2015 as compare to 2014 and on other hand fix asset was increased.O 2.58 time in the year of 2012 as compare to 2011  It was still increased in the year 2013 by 0.

16 time in the year 2012 and this ratio was same in the year of 2013 also 3.  It was increased by 0.23 times. C.T.32 time it increase almost 0.82 time.  In the year of 2011 the ratio was 3.34 times to 6.5 times  In the year of 2014 this ratio was 4.  This ratio was increase continuously because of increase of current asset from 2011 to 2015.O 7 6 5 4 3 2 1 0 2011 2012 2013 2014 2015 18 .  Again the ratio was increase in the 2015 by1.CURRENT ASSET TURNOVER RATIO(CATR):  From 2011 to 2015 this ratio was increasing year to year by 3.34 times.A.91 times as compare to previous year.  This is the reason behind this ratio was keep on increasing trend.

 It was decreased in 2012 by 1. which is measured by total asset turnover .51% 19 . which is measured by the equity multiplier = GP EBIT SALES EBT EAT C.89%. DuPont analysis tells us that ROE is affected by three things: .73%  It was still declining in the year of 2014 and 2015 also in 2014 this ratio was 11.3% to 11.Operating efficiency. assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity (ROE). which is measured by profit margin .15% and in 2015 10.DU-PONT RATIO ANALYSIS What is the 'DuPont Analysis? The DuPont analysis is a method of performance measurement that was started by the DuPont Corporation in the 1920s.59% as compare to 2011  It was again decreased in the year of 2013 from 12. It is also known as "DuPont identity".Financial leverage. With this method.E Sales GP CAP.  In the year of 2011 this ratio was 13.Asset use efficiency.W  From 2011 to 2015 this ratio was continuous decreased. because of net worth is increase by every year while other component of this ratio was increase but lower rate as compare to the net worth. EMPLO EBIT EBT N.

 In year 2015 cash flow from operating activity were 35285 it was decreased as compare to year 2014.00% 6.00% 2. this ratio was declining trend in nature for this five year 2011 to 2015 DU-PONT RATIO 16.00% 10.00% 4.00% 14. which was increased to 25750 in year 2012.00% 2011 2012 2013 2014 2015 ANALYSIS OF CASH-FLOW STATEMENT Cash Flow from Operating Activities:  Cash flow from operating activities in year 2011 was 33280.00% 0.00% 8. So.  In year 2014 cash flow from operating activities was 42160.  In year 2013 cash flow from operating activities was 32995. 20 .00% 12.

21 .  This cash used in investing activities in the year of 2015 decreased to 55998.  In 2012 in was just 3046 it means that it is reduce as compare to previous year. Cash Flow from Operating activities 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2011 2012 2013 2014 2015 Cash used in Investing Activities:  From year 2011 the cash which was used in investing activities was 20333.  In years 2013 the amount was high as compare to 2012 it was 14979  It was shooting up in the year of 2014 from 14979 to 64013.

 It was again negative (8249) in the year 2013.  So. after shows this five year data of cash flow we can say that the Reliance Industries limited investing more and more money by every year.  Which was negative (11465) in the year of 2012. we can say that the Reliance Industries limited investing more and more money 22 .  But the cash used in financing activity in the year was positive by 5530  But in the year of 2015 this figure was again negative by (940)  So. Net Cash used in Investing activities 0 2011 2012 2013 2014 2015 -10000 -20000 -30000 -40000 -50000 -60000 -70000 Cash Flow from Financing Activities:  In the year of 2011 the cash used in financing activity was it 725.

 In 2015 it was again shooting up by 1.07%.  If we seen overall five year graph it was up down trend. 23 .69% to 11.  But the growth was fall down in the year of 2013 by 1.37% because of the ROE is higher and retention ratio almost same.69%  It was increase from 9. Net Cash used in Financing Activity 10000 5000 0 2011 2012 2013 2014 2015 -5000 -10000 -15000 SUSTAINABLE GROWTH RATE  The growth of the company in the year of 2011 was 9.62% to 11.  In the year of 2014 growth rate was increase from 10. because of the ROE is higher as compare to previous year 2011.75% in the year 2012. In 2012 it was increase but in 2013 it was down and again increase till the 2015.13% because of retention ratio was lower as compare to 2012 and ROE almost same.

00% 6.00% 10.moneycontrol.00% 2.00% 2011 2012 2013 2014 2015 BIBLIOGRAPHY https://en.org http://m.com 24 .00% 8.00% 12. SUSTAINABLE GROWTH RATE 14.wikipedia.00% 4.m.00% 0.