“ANALYSIS OF CORPORATE GOVERNANCE IN RELIANCE

INDUSTRIES LIMITED, PATALGANGA”

A PROJECT SUBMITTED TO THE
UNIVERSITY OF MUMBAI
FOR PARTIAL COMPLETION OF THE DEGREE OF
BACHELOR OF ACCOUNTING & FINANCE
(BAF) UNDER THE FACULTY OF COMMERCE

Submitted by
YASH AMAR DHURAV
From class
TY BCOM (A&F)
Specialization in
ACCOUNTING & FINANCE
Under the guidance of
Prof. HARDIK DAVE

MAHATMA EDUCATION SOCIETY’S

PILLAI HOC COLLEGE OF ARTS, SCIENCE AND COMMERCE
RASAYANI - 410207
2021-2022

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 DECLARATION

I the undersigned Mst. Yash Amar Dhurav here by, declares that the work embodied in this
project work titled “Analysis of Corporate Governance in Reliance Industries Limited,
Patalganga” forms my own contribution to the research work carried out under the guidance of
Prof. Hardik Dave. This project is a result of my own research work and has not been previously
submitted to any University for any other Degree or Diploma.
Wherever reference has been made to previous works of others, it has been clearly mentioned as
such in the bibliography.
I hereby, further declare that all the information of this document has been obtained and
presented in accordance with the academic rules and ethical conduct.

Yash Amar Dhurav

Certified By

Prof. Hardik Dhurav

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 Acknowledgement

First of all praises and gratitude to the almighty God for showering blessings throughout my
research work and complete it successfully.
I take this opportunity to thank the University of Mumbai for giving me this golden opportunity
to do this project.
I would like to thank our Principal Dr. Lata Menon for providing us the necessary facilities
required for the completion of the project.
I express my sincere gratitude towards my project guide Prof. Hardik Dave whose invaluable
guidance and motivation made this project complete successfully.
I also express my gratitude towards my parents for believing in me, supporting me, loving me
and understanding me throughout the project work.
My special thanks to all the faculty members and my friends for their keen interest shown to
complete this project work successfully.

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 Executive Summary

Good governance is the expectation of every stakeholder, especially shareholder. Governance is

related with the controlling of the activity and controlling of the corporate sector and is termed
as corporate governance. But the implementation of ‘Corporate Governance’ is not that much
simple as its meaning. Corporate Governance is recently emerged concept and has taken the
attention of each and every country, investors and corporate professionals.

The first chapter gives an overview of corporate governance. It introduces the concept of
Corporate Governance, its objectives and scope.
The second chapter is about the company. It discusses the management systems and
organizational structure of the company.
The third chapter includes the literature review of corporate governance. It also includes the
need, principles and importance of corporate governance.
The fourth chapter is about corporate governance in Reliance Industries. The governance
structure and the code of conduct followed in the company. It also includes the CSR activities
and means of communications in the company.
The fifth chapter includes the summary, findings and suggestions.

Corporate governance is the practice, which requires transparency, accountability and good
performance from the corporate executives. It has a strong base from the internal management of
a company, to the shareholders’ value as well as corporate social responsibility. Reasons for
selecting the topic ‘corporate governance’ in an industry is to find out whether corporate
governance and a proper code of conduct is actually being practiced by the corporate level
executives or not.

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 INDEX
S.no. Content Page no.
Chapter 1 Introduction
1.1 Prelude
1.2 Rationale of study
1.3 Objective of the study
1.4 Methodology
1.5 Scope of the study
Chapter 2 Company Profile
2.1 Vision & Mission statement
2.2 Core values of RIL
2.3 Core Competencies of RIL
2.4 Core strengths of RIL
2.5 Objectives of RIL
 Strategic objectives
 Financial objectives
2.6 Management system of RIL
2.7 Organizational Structure
2.8 Functions of RIL
Chapter 3 Literature Review
3.1 Need of Corporate Governance (CG)
3.2 Principles of CG
3.3 Importance of CG
3.4 Scope of CG
Chapter 4 Corporate Governance in RIL
4.1 Governance Structure
4.2 Board Leadership
4.3 Ethics and governance policies
4.4 Managerial initiatives for audit, control and compliance
4.5 RIL’s sustainability reporting
4.6 Integrated reporting approach
4.7 Shareholder’s Communication
 Means of communication
4.8 Code of conduct
4.9 Strategy and framework
4.10 Corporate Social Responsibility at RIL
4.11 Internal control Systems
4.12 Corporate governance practices at RIL
Chapter 5 Summary, Findings & Suggestions
5.1 Summary
5.2 Findings
5.3 Suggestions
Conclusion
Bibliography

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 CHAPTER 1

INTRODUCTION

1.1 PRELUDE

Corporate Governance is the collection of mechanisms, processes and relations by which

corporations are controlled and operated. Corporate Governance structures and principles
identify the distribution of rights and responsibilities among different participants in the
corporation and include the rules and procedures for making decisions in corporate affairs. The
term encompasses the internal and external factors that affect the interests of a company’s
stakeholders, including shareholders, customers, suppliers, government regulators and
management. The Board of directors is responsible for creating the framework of corporate
governance that best aligns business conduct with objectives. Corporate governance has also
been more narrowly defined as "a system of law and sound approaches by which corporations
are directed and controlled focusing on the internal and external corporate structures with the
intention of monitoring the actions of management and directors and thereby, mitigating agency
risks which may stem from the misdeeds of corporate officers".

Corporate Governance is an increasingly significant aspect of business and organizational

management, extending to international politics & trade laws and to globalized economics,
corporations and organizations and markets. Corporate Governance is a very sophisticated and
flexible concept which addresses fundamental organizational purposes (for every type of
organization - from small businesses to the largest multinational conglomerate) together with
the most serious challenges arising from the globalization of corporate and organizational
structures and the markets they serve. Corporate Governance has also become an instrument for
understanding, questioning, and refining some fundamental economic systems and philosophies.

Corporate governance is nothing more than how a corporation is administered or controlled.

Corporate governance takes into consideration company stakeholders as governmental
participants, the principal participants being shareholders, company management, and the board

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of directors. Adjunct participants may include employees and suppliers, partners, customers,
governmental and professional organization regulators, and the community in which the
corporation has a presence. Because there are so many interested parties, it’s inefficient to allow
them to control the company directly. Instead, the corporation operates under a system of
regulations that allow stakeholders to have a voice in the corporation commensurate with their
stake, yet allow the corporation to continue operating in an efficient manner. Corporate
governance also takes into account audit procedures in order to monitor outcomes and how
closely they adhere to goals and to motivate the organization as a whole to work toward
corporate goals.

1.2 RATIONALE OF THE STUDY

Companies engage in corporate governance to align the long-term goals of shareholders,

management and employees, which includes recognizing a civic duty to benefit the locales in
which the companies operate.
The organization of the world economy especially in current years has seen corporate
governance gain prominence mainly due to:
● Institutional investors, as they seek to invest funds in the global economy and insist
on high standard of corporate governance in the companies they invest in.
● Public attention attracted by corporate scandals and collapses has forced stakeholders
to carefully consider corporate governance issues.
Corporate governance is therefore important as it is concerned with:
● Profitability and efficiency of the firm.
● Long-term competitiveness of the firms in the global economy.
● The relationship among firm’s stakeholders.

In the 1800s, state corporation laws assisted in the creation of corporate boards, who could
govern, much like state congresses, without the unanimous consent of shareholders. This made
the running of corporations much more efficient. As time passes, corporate boards seem to be
gathering more and more power, particularly with the inception of large mutual funds and similar

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cash-building entities, which place another layer of organization between stakeholders and
corporate governors. Fortunately, most people directly involved in corporate governance are
honest and interested in what’s best for the company, though there have been glaring and
destructive exceptions to that lately.

1.3 OBJECTIVES OF THE STUDY

The fundamental objective of corporate governance is to boost and maximize shareholder value
and protect the interest of other stakeholders. The World Bank has described that Corporate
Governance enables the firm to attract financial and human capital to perform efficiently,
prepare itself by generating long term economic value for its shareholders, while respecting the
interests of stakeholders.
Corporate governance has various objectives to strengthen investor's confidence and intern leads
to fast growth and profits of companies.
The objectives are:
● A properly structured Board proficient of taking independent and objective decisions is
in place at the helm of affairs.
● The Board is balanced as regards the representation of suitable number of non-
executive and independent directors who will take care of the interests and well-being
of all the stakeholders.
● The Board accepts transparent procedures and practices and arrives at decisions on
the strength of adequate information.
● The Board has an effective mechanism to understand the concerns of stakeholders.
● The Board keeps the shareholders informed of relevant developments impacting
the company.
● The Board effectively and regularly monitors the functioning of the management team.
● The Board remains in effective control of the affairs of the company at all times.

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1.4 METHODOLOGY

The methodology adopted for this project is exploratory in nature since there is no hypothesis
that has to be tested. The conclusions are drawn by exploratory research work.
Sources of collection of data used are mentioned below:
1. Primary Data sources:
● Practical experience gathered through working in the office of Reliance Industries.
● Observation by visiting different departments.
● Informal conversation with the Top Level Managers of RIL.

2. Secondary Data sources:

● Sustainability Reports of RIL
● Annual Report of RIL
● Books & Journals in the Library of RIL
● Corporate Governance Manual
● Website of Reliance Industries Limited, patalganga.

1.5 SCOPE OF STUDY

Corporate Governance refers to the way a corporation is governed. It is the technique by which
companies are directed and managed. It means carrying the business as per the stakeholders’
desires. It is actually conducted by the board of Directors and the concerned committees for
the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as
well as, economic and social goals.

Corporate Governance is the interaction between various participants (shareholders, board of

directors, and company’s management) in shaping corporation’s performance and the way it is
proceeding towards. The relationship between the owners and the managers in an organization
must be healthy and there should be no conflict between the two. The owners must see to it that
a
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person's actual performance is according to the standard performance. These dimensions of
corporate governance should not be overlooked.

Corporate Governance deals with the manner the providers of finance guarantee themselves of
getting a fair return on their investment. Corporate Governance clearly distinguishes between the
owners and the managers. The managers are the deciding authority. In modern corporations, the
functions/ tasks of owners and managers should be clearly defined determining ways towards
effective strategic decisions.

Corporate Governance ensures transparency which ensures strong and balanced economic
development. This also ensures that the interests of all shareholders (majority as well as minority
shareholders) are safeguarded. It ensures that all shareholders fully exercise their rights and that
the organization fully recognizes their rights.

Corporate Governance has a broad scope. It includes both social and institutional aspects.
Corporate Governance encourages a trustworthy, moral, as well as ethical environment.

Parties involved directly in corporate governance do not just include the Board of Directors, but
also the SEC, the company’s CEO, management and the most important shareholders.
Shareholders typically delegate their decision-making rights to managers to act in their best
interests. Corporate governance is based largely on trust – the trust, by the stakeholders, that
revenues will be fairly shared, and that those directly involved in running the company, are
running it in an aboveboard, honest, and open manner, and that they represent the best interests
of the company and of the shareholders. Therefore, key elements of corporate governance are
honesty, trust and integrity, openness, responsibility, and accountability. Recent new
governmental regulation has attempted to reinforce these elements.

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 CHAPTER 2

COMPANY PROFILE

VISION & MISSION STATEMENTS OF RIL

VISION
“Through sustainable measures create value for nation, enhance quality of life across the
entire socio-economic spectrum and help spread ahead India as a global leader in the domains
we operate.”
MISSION
● Create value for all stakeholders.
● Grow through innovation.
● Use sustainability to drive product development and enhance operational efficiencies.
● To attain global best practices and become a leading power generating company.
● To achieve excellence in project execution, quality, reliability, safety and
operational efficiency.
● To relentlessly pursue new opportunities, capitalizing on synergies in the
power generation sector.
● To consistently enhance our competitiveness and deliver profitable growth.
● To practice higher standards of corporate governance and be a financially
sound company.

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Reliance Industries Limited (RIL), for the past several years, is India's largest private sector
company on all major financial parameters. Our group's activities span exploration &
production of oil & gas, petroleum refining and marketing, petrochemicals (polyester, fiber
intermediates, polymers and chemicals), textiles, retail and special economic zones (SEZs).
Reliance Industries Limited (RIL) is an Indian multinational conglomerate company
headquartered in Mumbai, Maharashtra. Reliance owns businesses across India engaged in
energy, petrochemicals, textiles, natural resources, retail, and telecommunications. Reliance is
one of the most profitable companies in India, the largest publicly traded company in India by
market capitalization, and the largest company in India as measured by revenue after recently
surpassing the government-controlled Indian Oil Corporation. On 18 October 2007, Reliance
Industries became the first Indian company to exceed $100 billion market capitalization.

The company is ranked 106th on the Fortune Global 500 list of the world's biggest corporations
as of 2019. It is ranked 8th among the Top 250 Global Energy Companies as of 2016. Reliance
continues to be India's largest exporter, accounting for 8% of India's total merchandise exports
with a value of Rs147,755 cr. and access to markets in 108 countries. Reliance is responsible for
almost 5% of the government of India's total revenues from customs and excise duty. It is also
the highest income tax payer in the private sector in India. In 2019, Reliance Industries become
the first Indian firm to cross Rs9 lakh cr. market valuation mark. It has become the first ever
Indian company to cross Rs10 lakh cr. market capitalization.
At Reliance, manufacturing is a passion. This passion has driven them to set up world-class
manufacturing facilities with extreme operational efficiencies in record times. Over the years,
they have earned an enviable reputation for flawless project execution and management.

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Reliance's products and services portfolio touches almost all Indians on a daily basis, across
economic and social spectrums. They are now focused on building platforms that will herald the
Fourth Industrial Revolution and will create opportunities and avenues for India and all its
citizens to realize their true potential.

2.1 RELIANCE INDUSTRIES LIMITED, PATALGANGA

Reliance Industries is into multiple

businesses and one of the drivers of their
revenue is their petroleum refining and
petrochemical business. Reliance features
in the list of the fortune 500 companies
which can be attributed to their
superlatives services. For smooth
functioning of their petroleum and
petrochemical division they have
established a testing facility
commonly referred to as the Central Petro QA/QC Laboratory. It is located in the Raigad,
Maharashtra, equipped with state of the art modern technological developments to conduct
chemical testing on industrial and fine chemicals. Few of the chemicals include linear alkyl
benzene, pan-xylene and pure terephthalic acid.

At Reliance, manufacturing is a passion. This passion has driven them to set up a world-class
manufacturing facility with extreme operational efficiencies in record times. Over the years, they
earned an enviable reputation for flawless project execution and management.
There is an unwavering commitment to safety in all our operations. Reliance adopts latest and
best technologies for all new projects, invests in cutting edge technology for safe and reliable
operations. The safety culture is reinforced with continuous training and updates of processes
and engaging some of the best experts to improve safety systems. Continued focus on asset

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renewal ensures that all our assets are state of art and keeping with new technologies for
improving safety.

Their expertise lies in developing products and markets from 'concept to fruition' and beyond.
Their constant focus on innovation has helped them to emerge as a trendsetter in various markets
and be known worldwide for their unbeatable range of products. Their operations span from the
exploration and production of oil and gas to the manufacture of petroleum products, polyester
products, polyester intermediates, plastics, polymer intermediates, chemicals, synthetic textiles
and fabrics.

2.2 CORE VALUES OF RIL

At Reliance, we believe that any business conduct can be ethical only when it rests on these core
values of Customer Value, Ownership mindset, Respect, Integrity, One team & Excellence.
Strong commitments to these values have been the guiding principles for Reliance. These values
are to be kept in focus by all Reliance employees, consultants & associates irrespective of their
designations under all the circumstances, irrespective of the goals that are intended to be
achieved.

A brief description of these core values are outlined below:

 Customer Value: We believe the customer is the reason for our existence and the only
guarantee to our future. Everything that we do must delight our customer every time
we serve them.
● Ownership Mindset: We believe the success and the reputation of the company is
paramount. Having an ownership mindset is fundamental to our existence. It creates
a sense of inspiration and purpose. It enables accountability and accomplishment. It
ensures our strong commitment to the highest standards of safety and environment
protection.

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 ● Respect: We believe that without respecting all our stakeholders there can be no
reliance. We acknowledge that there may be a difference of perspectives but there must
always be respect.
● Integrity: Upholding our reputation is paramount as we are judged by how we act. We
are committed to be truthful in all our actions. We strive to be honest and forthright
with one another and with all our stakeholders. It begins with compliance with laws and
regulations. We hold ourselves to the highest ethical standards and behave in ways that
earn the trust of others.
● One Team: We believe in Synergy. Whatever the strength of the individual, we will
accomplish more together. We put the team ahead of our personal success and commit
to building its capability. We trust each other to deliver on our respective obligations.
● Excellence: We are committed to excellence, in spirit and action. We believe
everything that we do and everything we think can always get better. We see all of our
activities in terms of our higher purpose and ideals, which always drives our quest for
excellence.

2.3 CORE COMPETENCIES OF RIL

 Largest in-house pool of intellectual capital.

 Attracting and retaining best people and nurturing the Intrapreneurial spirit.
 Unique financial engineering capabilities.
 Demonstrated ability to implement complex and multi-billion dollar projects in record
time frames.
 Ability to create world class assets at 30% plus capital cost advantage compared to peer
group.
 Absorption of diverse and complex technologies and optimal operation of all
the manufacturing plants.
Reliance’s core competency is its ability to conceptualize and implement multi-million dollar
projects.

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2.4 CORE STRENGTHS OF RIL

● Distribution and Reach: Reliance Industries has a large number of outlets in almost
every state, supported by a strong distribution network that makes sure that its
products are available easily to a large number of customers in a timely manner.
● Cost Structure: Reliance Industries’ low cost structure helps it produce at a low cost
and sell its products at a low price, making it affordable for its customers.
● Dealer Community: Reliance Industries has a strong relationship with its dealers that
not only provide them with supplies but also focus on promoting the company's products
and training.
● Financial Position: Reliance Industries has a strong financial position with
consecutive profits in the past 5 years, along with accumulated profit reserves that can
be used to finance future capital expenditures. Reliance Industries has a large asset
base, which provides it with better solvency.
● Return on Capital Expenditure: Reliance Industries has been successfully able to
generate positive returns on the capital expenditure it has incurred on various projects
in the past.
● Automation: of various stages of production has allowed the more efficient use of
resources and reducing costs. It also allows for consistency in quality of its products
and provides the ability to scale up and scale down production as per the demand in the
market.
● Skilled Labor force: Reliance Industries has invested extensively in the training of
its employees that has resulted in it employing a large number of skilled and
motivated employees. Reliance Industries has a diversified workforce, with people of
many geographical, racial, cultural and educational backgrounds that help the
company by bringing in diverse ideas and methodologies of doing things. Reliance
Industries has qualified and accredited professionals working under in its team.
● Entering new markets: Reliance Industries’ innovative teams have allowed it to
come up with new products and enter new markets. It has been successful in past, in
most of the initiatives it has taken in new markets.

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 ● Social Media: Reliance Industries has a strong presence on social media with more than
millions of followers on the three most famous social media platforms: Facebook, Twitter
and Instagram. It has high levels of customer engagement on these platforms with low
customer response time.
● Product Portfolio: Reliance Industries has a large product portfolio where it provides
products in a large range of categories. It has a number of unique product offerings
that are not provided by competitors.

2.5 OBJECTIVES OF THE COMPANY

● Create synergistic effect by creating high quality and diversified portfolio.

● Provide diversified financial services with focused people.
● Appreciate uniqueness of each customer’s requirements and serve the customers
with product flexibility.
● Diversification of sources of fund.
● Enhance corporate value through sustained growth.
● Promote a work culture that fosters learning, individual growth, team spirit and
creativity to overcome challenges and attain goals.
● Encourage ideas, talent and value systems and become the employer of choice.
● Earn the trust and confidence of all stakeholders, exceeding their expectations.
● Uphold the guiding principles of trust, integrity and transparency in all aspects
of interactions and dealings.

STRATEGIC OBJECTIVES

● Consistent growth: Reliance is pursuing its strategy to grow, by leveraging its

existing know-how and asset base and investing in opportunities strategic to its
existing businesses and those of the future.

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 ● Delivering value: Reliance’s business creates value for its shareholders, employees,
customers and society, and each new opportunity it pursues must meet these criteria or
it does not invest in it.
● Driving innovation: Driving Strategic Innovation is a powerful alliance in Reliance.
Designed to change the way you think about innovation and technology strategy, it
gives you a better toolbox for new solutions and business model innovation. You
explore your own approach and style to innovation and leave with a roadmap which
supports your company’s strategic goals and accelerates change.
● Sustainable transformation in society: Our focus on the five strategic pillars ensures
that we grow our business while responding to global trends and stakeholder needs. The
key activities undertaken against each of the strategic pillars build on the progress we
have already made in order to reduce our environmental impact, and contribute to
society by investing in meaningful purposes.

FINANCIAL OBJECTIVES

Revenue Growth Objectives: Increasing revenue is the most basic and fundamental financial
objective of Reliance Industries Limited. Revenue growth comes from an emphasis on sales and
marketing activities, and is solely concerned with increasing top-line earnings – earnings before
expenses. The impressive earnings in the petrochemicals business is a result of Reliance’s
investments over the last few years. This is reflected in the record production of 37.7 MMT and
highest ever earnings delivered by the business in 2019. The EBIT margins are increased by 180
bps in 2019.

Profit Margins and Bottom-Line Earnings: Profit objectives are a bit more sophisticated than
revenue growth goals. Any money left over from sales revenue after all expenses have been paid
is considered profit. Profit, or bottom-line earnings, can be used in a number of ways, including
investing it back into the business for expansion and distributing it among employees in a profit-
sharing arrangement. Reliance Industries has a handsome profit margin as per 2019:
Total Revenue - ₹622,809 cr. (US$87 billion) (2019)
Operating income - ₹92,656 cr. (US$13 billion)
(2019)
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Net income - ₹39,588 cr. (US$5.6 billion) (2019)

Financial Sustainability in Times of Turmoil: At certain times, companies or brands may be

primarily concerned with basic economic survival. Retrenching is a marketing technique – based
on a financial objective – that attempts to keep a brand alive and keep current revenue and profit
levels from falling any further during the “decline” stage of the product/brand life cycle.
Reliance industries faced some controversies too but that did not affect the business to such
an extent till now that its financial sustainability was challenged. The De-merger of RIL in
2005- 2006 and the relationship with ONGC were the times of turmoil for RIL.

Return on Investment: Return on Investment is a financial ratio applied to capital expenditures.

ROI is concerned with the return generated by investments in real property and productive
equipment. The increase in returns of RIL over the years is in the following diagram.

2.6 MANAGEMENT SYSTEM OF RIL

A management system is a set of policies, processes and procedures used by an organization to

ensure that it can fulfill the tasks required to achieve its objectives.
Reliance's robust Management Information System is the backbone of their sound operations.
This MIS acts as an implementation, measurement and monitoring tool that ensures long-term
sustainable performance. In line with their business goals, they have adopted an Integrated
Management System (IMS) across the company. This combined with the disciplined internal
audit function ensures regulatory compliance and continuous performance improvement.

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In addition, they follow leading management practices that align their processes to deliver
superior products and services. Continual and breakthrough improvements are carried out in all
manufacturing and service functions through Quality Circles, 5S and Six Sigma.
They have completed 27 Six Sigma projects, leading to financial benefits worth INR 250
million per annum. Presently, 446 Six Sigma improvement projects are being executed across
14 manufacturing divisions, including 40 Lean Six Sigma projects. The Company has 582 Black
and Green Belts in Six Sigma projects at its manufacturing locations and offices. Nearly 2,200
team members and supervisory personnel are providing active support for the success of the
projects.

Investor’s Grievance Management:

The Investors’ Grievance Committee is managed by the Board. A compliance officer is

appointed by the Board as well who ensures that the internal security auditors are performing
their jobs avoiding errors & biasness. The internal security auditors performs audit on the
transactions, communicates with the investors and provides regular updates to the Board.

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2.7 ORGANIZATIONAL STRUCTURE OF RIL

Organizational structure of the company is multi-divisional structure whereby every project

undertaken by the company is managed by different groups having their own management team
for each project such that within multi-divisional structure there is sub-hierarchical
organizational structure for each project. Existence of teamwork among the members and as
well as in some situations there exists a democratic form of decision making. Top management
level makes strategic decisions for welfare of the business and lower level implements the
decisions made. Given below is the organizational structure of the Reliance Industries Limited.

Chairman

Non-Executive and Executive Directors

Board of
Directors

Seven Independent
Seven
Directors
Non- Independent Directors

President and vice presidents for each dep

head of the departments

The company has combined Non-executive and Executive directors. The Board is composed of
14 directors including 7 independent directors.

Belief of the company is that in order to conduct any business has to be ethical, then only it is
possible to achieve success throughout and it rests on core values such as integrity, respect,
honesty, fairness, trustworthiness, citizenship, caring, responsibilities and purposefulness. There
is mutual understanding among the team members that they all are equal and one's own interest
is similar to others. The core of these ethics is that the team members conduct business of the
company with honesty and integrity, in accord with laws and in such a manner that values of all
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stakeholders are created. The culture of the company is to work together in order to accomplish
the established goals.

2.8 FUNCTIONS OF RIL

● Division of work: In division of work they divide the work in different

departments.by making departments it is easy to make smart goals and it also saves
time. It is not possible to run such a large organization without division of work in
different departments. Reliance Company in such a large organization that it needs
departments.
● Departmentalization: refers to the process of grouping activities into departments.
Division creates specialists who need coordination. This coordination is facilitated by
grouping specialists together in departments. Departments such as Geographic
department, Product department, Customer department, Process department, Functional
department.
● Make Hierarchy: A hierarchy is an arrangement of items (objects, names, values,
categories, etc.) in which the items are represented as being “above,” “below,” or “at the
same level as” one another and with only one “neighbor” above and below each level.
These classifications are made with regard to rank, importance, seniority, power status
or authority. A hierarchy of power is called a power structure. Abstractly, a hierarchy is
simply an ordered set or an acyclic graph following the Maslow's Hierarchy of needs!
● Coordination: Coordination can be defined as synchronization of efforts from the
stand- point of time and the sequence of execution in general coordination means
bringing together the activities and resources of organization and bringing harmony in
them. Coordination is required at idle level to balance the activities of different
departments so that these can work as a part of one organization only.

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 CHAPTER 3

LITERATURE REVIEW

Corporate governance is the broad term that describes the processes, customs, policies, laws and
institutions that directs the organizations and corporations in the way they act, administer and
control their operations. It works to achieve the goal of the organization and manages the
relationship among the stakeholders including the board of directors and the shareholders. It
also deals with the accountability of the individuals through a mechanism which reduces the
principal-agent problem in the organization. Fine corporate governance is an essential standard
for establishing the striking investment environment which is needed by competitive companies
to gain strong position in efficient financial markets. Good corporate governance is fundamental
to the economies with extensive business background and also facilitates the success for
entrepreneurship.

Corporate governance's importance arises in modern corporations due to the separation of

management and ownership control in the organizations. The interests of shareholders are
conflicting with the interests of managers. The principal agent problem is reflected in the
management and direction related problems due to the differential interests of firm’s internal and
external stakeholder.
Luigi Zingales (1998) defines Corporate Governance as “Allocation of ownership, capital
structure, managerial incentive schemes, takeovers, board of directors, pressure from institutional
investors, product market competition, labor market competition, organizational structure, etc.,
can all be thought of as institutions that affect the process through which quasi-rents are
distributed”.
Garvey and Swan (1994) assert that “Governance determines how the firm’s top decision makers
(executives) actually administer such contracts”.
Shleifer and Vishny (1997) define corporate governance as “the ways in which suppliers of
finance to corporations assure themselves of getting a return on their investment”.
OECD (1999) defined corporate governance as "Corporate Governance is the system by which
business corporations are directed and controlled. The corporate governance structure specifies

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the distribution of rights and responsibilities among different participants in the corporation
such as the board of directors, managers, shareholders and other stakeholders and spells out the
rules and procedures for making decisions on corporate affairs. By doing this, it also provides a
structure through which the company objectives are set, and the means of attaining those
objectives and monitoring performance.”
Oman (2001) defined Corporate Governance as a term that refers to the private and
public institutions that include laws, regulations and the business practices which governs
the relationship between the corporate managers and the stakeholders.
The Ministry of Finance, Singapore (2001) defines corporate governance as “The process and
structure by which the business and affairs of the company are directed and managed, in order
to enhance long term shareholder value through enhancing corporate performance and
accountability, while taking into account the interests of other stakeholders. Good corporate
governance therefore embodies both enterprise (performance) and accountability
(conformance).”
La Porta, Silanes and Shleifer (2000) view corporate governance as a set of mechanisms
through which outside investors (shareholders) protect themselves from inside investors
(managers).
The Organization for Economic Cooperation and Development provides another perspective by
stating that Corporate Governance is the system by which business corporations are directed and
controlled.

The corporate governance structure specifies the distribution of rights and responsibilities among
different participants in the corporation such as the Board of directors, managers, shareholders
and other stakeholders and spells out the rules and procedures for making decisions on corporate
affairs. By doing this, it also provides the structures through which the company objectives are
set, and the means of attaining those objectives and monitoring performance.

Report of SEBI committee (India) on Corporate Governance defines corporate governance as

“the acceptance by management of the inalienable rights of shareholders as the true owners of
the corporation and of their own role as trustees on behalf of the shareholders. It is about
commitment to values, about ethical business conduct and about making a distinction between
personal & corporate funds in the management of a company.”
24
The manner in which the company is managed and controlled is termed as corporate governance.
It can be also termed as a blueprint of a company which completely explains each and every step
to direct it towards its objectives. Its main objective is to carry on all the business activities in
the interest of its stakeholders.

3.1 NEED OF CORPORATE GOVERNANCE

● Fairness: Fairness refers to equal treatment, for example, all shareholders should
receive equal consideration for whatever shareholdings they hold. However, some
companies prefer to have a shareholder agreement, which can include more extensive
and effective minority protection. In addition to shareholders, there should also be
fairness in the treatment of all stakeholders including employees, communities and
public officials. The fairer the entity appears to stakeholders, the more likely it is that it
can survive the pressure of interested parties.
● Accountability: Corporate accountability refers to the obligation and responsibility to
give an explanation or reason for the company’s actions and conduct. The board should
present a balanced and understandable assessment of the company’s position and
prospects. The board is responsible for determining the nature and extent of the
significant risks it is willing to take. The board should maintain sound risk management
and internal control systems. The board should establish formal and transparent
arrangements for corporate reporting and risk management and for maintaining an
appropriate relationship with the company’s auditor. The board should communicate
with stakeholders at regular intervals, a fair, balanced and understandable assessment of
how the company is achieving its business purpose.
● Responsibility: The Board of Director is given authority to act on behalf of the
company. They should therefore accept full responsibility for the powers that it is given
and the authority that it exercises. The Board of Director is responsible for overseeing the
management of the business, affairs of the company, appointing the chief executive and
monitoring the performance of the company. In doing so, it is required to act in the best

25
 interests of the company. Accountability goes hand in hand with responsibility. The
Board of Directors should be made accountable to the shareholders for the way in which
the company has carried out its responsibilities.
● Transparency: A principle of good governance is that stakeholders should be informed
about the company’s activities, what it plans to do in the future and any risks involved in
its business strategies. Transparency means openness, a willingness by the company to
provide clear information to shareholders and other stakeholders. For example,
transparency refers to the openness and willingness to disclose financial performance
figures which are truthful and accurate. Disclosure of material matters concerning the
organization’s performance and activities should be timely and accurate to ensure that all
investors have access to clear, factual information which accurately reflects the financial,
social and environmental position of the organization. Organizations should clarify and
make publicly known the roles and responsibilities of the board and management to
provide shareholders with a level of accountability. Transparency ensures that
stakeholders can have confidence in the decision-making and management processes of
a company.

3.2 PRINCIPLES OF CORPORATE GOVERNANCE

Corporate governance refers to all laws, regulations, codes and practices, which defines how
institution is administered and inspected, determines rights and responsibilities of different
partners, attracts human and financial capital, makes institution work efficiently, provides
economic value to stakeholders in the long turn while respecting the values of the community it
belong. For corporate governance, the management approach should be in accordance with the
following principles:
● Governance structure: All Organizations should be headed by an effective Board.
Responsibilities and accountabilities within the organization should be clearly
identified.
● The structure of the board and its committees: The board should comprise
independent minded directors. It should include an appropriate combination of
Executive & Non-Executive directors, Independent & Non Independent directors to
26
prevent one

27
 individual or a small group of individuals from dominating the board’s decision making.
The board should be of a size and level of diversity commensurate with the
sophistication and scale of the organization. Appropriate board committees may be
formed to assist the board in the effective performance of its duties.
● Director appointment procedure: There should be a formal, rigorous and transparent
process for the appointment, election, induction and re-election of directors. The search
for board candidates should be conducted and appointments made on merit against
objective criteria (to include skills, knowledge, experience, and independence and with
due regard for the benefits of diversity on the board). The board should ensure that a
formal, rigorous and transparent procedure be in place for planning the succession of
all key stakeholders.
● Director's duties remuneration and performance: Directors should be aware of their
legal duties. Directors should observe and foster high ethical standards and a strong
ethical culture in their organization. Each director must be able to allocate sufficient
time to discharge his or her duties effectively. Conflicts of interest should be disclosed
and managed. The board is responsible for the governance of the organization’s
information, information technology and information security. The board, committees
and individual directors should be supplied with information in a timely manner and in
an appropriate form and quality in order to perform to required standards. The board
committees and individual directors should have their performance evaluated and be
held accountable to appropriate stakeholders. The board should be transparent, fair and
consistent in determining the remuneration policy for directors and senior executives.
● Risk governance and internal control: The board should be responsible for risk
governance and should ensure that the organization develops and executes a
comprehensive and robust system of risk management. The board should ensure
the maintenance of a sound internal control system
● Reporting and integrity: The board should present a fair, balanced and
understandable assessment of the organization’s financial, environmental, social,
governance position, performance and outlook in its annual report and on its website.
● Audit: Organizations should consider having an effective and independent internal
audit function that has the respect, confidence and cooperation of both the board and the

28
 management. The board should establish formal and transparent arrangements to appoint
and maintain an appropriate relationship with the organization’s auditors.
● Relations with shareholders and other key shareholders: The board should be
responsible for ensuring that an appropriate dialogue takes place among the
organization, its shareholders and other key stakeholders. The board should respect the
interests of its shareholders and other key stakeholders within the context of its
fundamental purpose.

3.3 IMPORTANCE OF CORPORATE

GOVERNANCE Importance of Social Responsibility -

Today, social responsibility is given a lot of importance. The Board of Directors has to
protect the rights of the customers, employees, shareholders, suppliers, local communities,
etc. This is possible only if they use corporate governance.
Growing Number of Scams -
In recent years, many scams, frauds and corrupt practices have taken place. Misuse and
misappropriation of public money are happening every day in India and worldwide. It is
happening in the stock market, banks, financial institutions, companies and government offices.
In order to avoid these scams and financial irregularities, many companies have started corporate
governance.
Indifference on the part of Shareholders -
In general, shareholders are inactive in the management of their companies. They only attend the
Annual general meeting. Postal ballot is still absent in India. Proxies are not allowed to speak in
the meetings. Shareholders associations are not strong. Therefore, directors misuse their power
for their own benefits. So, there is a need for corporate governance to protect all the stakeholders
of the company.
Globalization -
Today most big companies are selling their goods in the global market. So, they have to attract
foreign investors and foreign customers. They also have to follow foreign rules and regulations.
All this requires corporate governance. Without Corporate governance, it is impossible to enter,
survive and succeed in the global market.
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3.4 SCOPE OF CORPORATE GOVERNANCE

Corporate governance is completely managed and controlled by the company’s director team and
concerned team solely for its stakeholder’s benefits. It is all about bringing the balance between
societal & individual goals and also social & economic goals.
It may be defined as the meeting between the various stakeholder of the company (directors
team, shareholders & management team of the company) whose main purpose is to direct the
company towards its pre-decided goals.

Corporate Governance's scope is as follows:

● If the corporate governance of the company is proper it will ultimately lead to
better economic growth and more success rate.
● Better corporate governance helps in getting the confidence of the investor which
will ultimately help the company in raising and acquiring the capital fast and
effectively.
● It also lowers the cost of the capital that is required for investment.
● It also helps in increasing the share price of the company.
● Proper corporate governance helps in attaining efficiency and also
minimizes mismanagement, risk and corruption.
● It plays a vital role in building up the goodwill of the corporation.
● It helps in managing and running the operations in the organization according to
the interest of all of its stakeholders.
● Corporate governance also serves as one of the parameters for the finance providers
as through it they can make sure of getting a fair return on their investments.
● It removes the confusion between the duties of the owners and managers. As in if the
duties of the owners and managers are not clearly mentioned it will affect the progress of
the company.
● Corporate Governance helps to take better strategic decision

30
 CHAPTER 4

CORPORATE GOVERNANCE IN RELIANCE INDUSTRIES LIMITED

Corporate Governance encompasses a set of systems and practices to ensure that the company’s
affairs are being managed in a manner which ensures accountability, transparency and fairness
in all transactions in the widest sense. The objective is to meet stakeholders’ aspirations and
societal expectations. Good governance practices stem from the dynamic culture and positive
mindset of the organization. We are committed to meet the aspirations of all our stakeholders.
This is demonstrated in shareholder returns, high credit ratings, governance processes and an
entrepreneurial performance focused work environment. Additionally, our customers are
benefited from high quality products delivered at extremely competitive prices. The essence of
Corporate Governance lies in promoting and maintaining integrity, transparency and
accountability in the management’s higher echelons. The demands of Corporate Governance
require professionals to raise their competence and capability levels to meet the expectations in
managing the enterprise and its resources effectively with the highest standards of ethics. It has
thus become crucial to foster and sustain a culture that integrates all components of good
governance by carefully balancing the complex inter-relationship among the Board of Directors,
Audit Committee, Corporate Social Responsibility and Governance Committee, Finance,
Compliance and Assurance teams, Auditors and the senior management.
Our employee satisfaction is reflected in the stability of our senior management, low attrition
across various levels and substantially higher productivity. Above all, we feel honored to be
integral to India’s social development. At RIL, we believe that as we move closer towards our
aspirations of being a global corporation, our Corporate Governance standards must be globally
benchmarked. Therefore, we have institutionalized the right building blocks for future growth.
The building blocks will ensure that we achieve our ambition in a prudent and sustainable
manner. RIL not only adheres to the prescribed Corporate Governance practices as per the listing
regulations, but is also committed to sound Corporate Governance principles and practices. It
constantly strives to adopt emerging best practices being followed worldwide. It is our venture to
achieve higher standards and provide oversight and guidance to the management in strategy
implementation, risk management and fulfillment of stated goals and objectives. Over the years,

31
we have strengthened governance practices. These practices define the way business is
conducted and value is generated. Stakeholders’ interests are taken into account before making
any business decision. RIL has the distinction of consistently rewarding its shareholders for
four eventful decades from its first IPO. Since then, RIL has moved from one big idea to
another and these milestones continue to fuel its relentless pursuit of ever-higher goals.

4.1 GOVERNANCE STRUCTURE

The Company has put in place an internal governance structure with defined roles and
responsibilities of every constituent of the system. The Company’s shareholders appoint the
Board of Directors, which in turn governs the Company. The Board has established committees
to discharge its responsibilities in an effective manner. RIL’s Company Secretary acts as the
Secretary to all the committees. The Chairman and Managing Director (CMD) provide overall
direction and guidance to the Board. In the operations and functioning of the Company, the
CMD is assisted by four Executive Directors and a core group of senior level executives.

The Chairman of the Board is the leader of the Board. The Chairman is responsible for fostering
and promoting the integrity of the board while nurturing a culture where the board works
harmoniously for the long-term benefit of the Company and all its stakeholders. The Chairman
guides the Board for effective governance structure in the company. In doing so, the Chairman

32
presides at the meetings of the Board and the shareholders of the Company. The Chairman takes
a lead role in managing the Board and facilitating effective communication among the Directors.

The Chairman is responsible for matters pertaining to governance, including the organization
and composition of the Board, the organization and conduct of Board meetings, effectiveness of
the Board, committees and individual Directors in fulfilling their responsibilities. The Company
Secretary assists the Chairman in management of the Board’s administrative activities such as
meetings, schedules, agendas, communication and documentation.

The Chairman actively works with the Human Resources, Nomination and Remuneration
Committee to plan the Board and committees’ composition, induction of directors to the Board,
plan for director succession, participate in the Board effectiveness evaluation process and meet
the individual directors to provide constructive feedback and advice. The Chairman is
responsible for corporate strategy, brand equity, planning, external contacts and all management
matters.

The Board has constituted a set of committees with specific terms of reference/scope to focus
effectively on the issues and ensure expedient resolution of diverse matters. The committees
operate as empowered agents of the Board as per their terms of reference. The Board of
Directors and the committees also take decisions by circular resolutions which are noted at every
meeting or discussion. The minutes of the meetings of all the committees of the Board are
placed before the board for noting and decisions are taken accordingly.

The governance structure of RIL is mostly similar to most of the other renowned companies. If
compared with structure of TATA Motors the organization chart of RIL depicts less précised
relationship between the Board of Directors, the committees and the senior management
functions. The CEO and MD chair the executive committees in both the companies also business
committees are chaired by related executive committee member as indicated otherwise by the
Chief Executive Officer & the Managing Director.

33
4.2 BOARD LEADERSHIP

A majority of the Board i.e. 8 out of 14 are Independent Directors. At RIL, it is our belief that an
enlightened Board consciously creates a culture of leadership to provide a long term vision and
policy approach to improve the quality of governance. The Board’s actions and decisions are
aligned with the Company’s best interests. It is committed to the goal of sustainably elevating
the Company’s value creation. The Company has defined guidelines and an established
framework for the meetings of the Board and committees. These guidelines seek to systematize
the decision- making process at the meetings of the Board and committees in an informed and
efficient manner.

The Board critically evaluates the Company’s strategic directions, management policies and
their effectiveness. The agenda for the Board reviews include strategic review from each of the
Committees, a detailed analysis and review of annual strategic and operating plans, capital
allocation and budgets. Additionally, the Board reviews related party transactions, possible risks
and risk mitigation measures, financial reports and business reports from each of the sector
heads. Frequent and detailed interaction sets the agenda and provides the strategic roadmap for
the Company’s future growth.

The Company has put in place an internal governance structure with defined roles and
responsibilities of every constituent of the system. The Company’s shareholders appoint the
Board of Directors, which in turn governs the Company. The Board has established seven
Committees to discharge its responsibilities in an effective manner. RIL’s Company Secretary
acts as the Secretary to all the Committees of the Board constituted under the Companies Act,
1956 / Companies Act, 2013. The Chairman and Managing Director (CMD) provide overall
direction and guidance to the Board. Concurrently, the CMD is responsible for overall
implementation. In the operations and functioning of the Company, the CMD is assisted by four
Executive Directors and a core group of senior level executives.

34
4.3 ETHICS AND GOVERNANCE POLICIES

At RIL, we strive to conduct our business and strengthen our relationships in a manner that is
dignified, distinctive and responsible. We adhere to ethical standards to ensure integrity,
transparency, independence and accountability in dealing with all stakeholders. Therefore, we
have adopted various codes and policies to carry out our duties in an ethical manner. Some of
these codes and policies are:
● A code of conduct for everyone.
● Code of Conduct for Prohibition of Insider.
● Trading Health, Safety and Environment (HSE).
● Policy Vigil Mechanism & Whistle Blower Policy.
● Policy on Materiality of Related Party Transactions and on Dealing with Related Party
Transactions.
● Corporate Social Responsibility Policy.
● Policy for Selection of Directors and determining Director's Independence.
● Remuneration Policy for Directors, Key Managerial Personnel and other Employees.
● Policy for determining Material Subsidiaries.
● Code of Practices and Procedures for Fair Disclosure of Unpublished Price
Sensitive Information.
● Policy for Preservation of Documents.
● Policy on Determination and Disclosure of Materiality of Events and Information
and Web Archival Policy.
● Dividend Distribution Policy.

35
4.4 MANAGERIAL INITIATIVES FOR AUDIT, CONTROL & COMPLIANCE

DTS & Associates LLP, Chartered Accountants are proposed as Auditors of the Company, for a
term of 5 consecutive years, subject to ratification of appointment by the members at the every
Annual General Meeting to be held after the ensuing Annual General Meeting. The Company
has an Internal Audit Cell besides external firms acting as an independent internal auditor that
reviews internal controls and operating systems and procedures. A dedicated Legal Compliance
Cell ensures that the Company conducts its businesses with high standards of statutory and
regulatory compliances.

RIL has instituted a legal compliance program in conformity with the best international
standards, supported by a robust online system that covers Company’s all businesses as well as
its subsidiaries. The purview of this system includes various statutes, such as industrial & labor
laws, taxation laws, corporate & securities laws and health, safety & environment regulations. At
the heart of our processes is the extensive use of technology. This ensures robustness and
integrity of financial reporting and internal controls allows optimal use and protection of assets,
facilitates accurate and timely compilation of financial statements & management reports and
ensures compliance with statutory laws, regulations and company policies.

The Company has established the Reliance Management System (RMS) as part of its
transformation agenda. RMS incorporates an integrated framework for managing risks and
internal controls. The internal financial controls have been documented, embedded and digitized
in the business processes. Internal controls are regularly tested for design, implementation and
operating effectiveness.

36
4.5 RIL'S SUSTAINABILITY REPORTING

RIL commenced annual reporting of its triple-bottom-line performance from the financial year
(FY) 2004-05. All its sustainability reports are assured externally. The maiden report in FY
2004-05, was based on the prevalent 'GRI G2' guidelines, received ‘in-accordance’ status from
GRI.
The subsequent reports from FY 2006-07 to FY 2010-11 were based on ‘GRI G3’ guidelines
and GRI Checked with an ‘A+’ application level.
From FY 2006-07, in addition to 'GRI G3' Sustainability Reporting Guidelines, RIL referred to
the American Petroleum Institute (API), The International Petroleum Industry Environmental
Conservation Association (IPIECA), Sustainability Reporting Guidelines and the United Nations
Global Compact (UNGC) Principles.
From FY 2006-07, RIL has also aligned its sustainability activities with the focus areas of the
World Business Council for Sustainable Development.
From FY 2011-12, RIL adopted the newly published 'GRI G3.1' guidelines and in addition
referred to 'GRI G3.1' – Oil & Gas Sector Supplement. In the same year, RIL also aligned its
sustainability report with the National Voluntary Guidelines on Social, Environmental and
Economic Responsibilities of Business framed by the Government of India.
RIL was among the first to adopt GRI’s 'G4' Guidelines from FY 2014-15 and also aligned the
'G4' Report to the 17 Sustainable Development Goals (SDG) released at the United Nation
Sustainable Development Summit in 2015 which embraces an universal approach to the
sustainable development agenda.
Since October 2016, the 'GRI G4' guidelines have transitioned to GRI Standards. The GRI
standards are the first global standards for sustainability reporting. In the current year, RIL has
adopted the GRI standards for sustainability reporting.

To strengthen its commitment to responsible business, the Board of the Company has adopted
Business Responsibility Framework based on the principles of National Voluntary Guidelines on
Social, Environmental and Economic Responsibilities of Business as issued by the Ministry of
Corporate Affairs, Government of India.

37
4.6 INTEGRATED REPORTING APPROACH

In the year 2016, RIL embraced the integrated reporting approach aligned with the International
Integrated Reporting Council’s (IIRC) framework. The long term sustainability of any business
is not only limited to its financial or economic value creation, but also depends upon other
things such as on the timely and sufficient availability of natural resources, people with the right
skill sets, knowledge and technology to support business processes and licenses to operate from
all relevant stakeholders. The concept of six capitals as propounded by the IRCC Framework
also states the interrelatedness of capitals with each other. Value creation across each capital is
fundamental to the long term viability of RIL’s business. RIL’s operations and strategy are
integrated with the capitals, they are as follows-

1. Natural Capital: RIL focuses on the five areas i.e. clean air, clean water, preventing soil
contamination, preserving flora and fauna and diligent use of scarce resources. RIL’s
intent is to ensure minimization of environmental impact through mitigation and offset
initiatives. While positive impacts like enhanced renewable portfolio and enhanced water
and waste recycling help RIL offsets negative impacts, mitigation of unavoidable
impacts is carried out through advanced technological interventions such as clean
technologies and investment in pollution control equipment.
2. Human Capital: RIL has created employment for more than 1.4 lakhs of employees
and through Jio more than 50 lakh people were employed. It continues to maintain a
progressive people environment, where purpose driven talent is attracted, engaged and
motivated by a consistent, meritocratic HR framework. RIL has provided around 76.06
lakh man-hours training to its people. RIL embraces a culture of diversity and provides
equal opportunity to all its employees.
3. Intellectual Capital: Intellectual Capital has transitioned from a smart buyer of
technology to a fast customizer of technology and a flagship developer through
largely in-house developed technology that creates significant value to the customer.
4. Manufacturing Capital: Setting up Refinery off gas cracker, Pet coke gasification plant,
improving long term supply security of ethane to the existing crackers were some of the

38
 key ongoing projects in FY 2016-17. RIL is future ready and can be easily upgraded with
the newest technology.
5. Financial Capital: RIL has maintained two notches above India’s sovereign rating for
its international debt at BBB+ by S&P. The ratings have been maintained despite RIL
being in an investment cycle. RIL is able to access capital from diversified markets at
competitive rates.
6. Social and Relationship Capital: RIL, through its social development projects under the
seven focus areas, has enabled the promotion of equitable economic growth and ensured
a more sustainable, inclusive and people-centric development.

4.7 SHAREHOLDER'S COMMUNICATION

The Board recognizes the importance of two-way communication with shareholders, giving a
balanced report of results & progress and responding to questions and issues raised. RIL’s
corporate website (www.ril.com) has information for institutional and retail shareholders alike.
Shareholders seeking information related to their shareholding may contact the Company
directly or through Company’s Registrars and Transfer Agents, details of which are available on
the Company’s website. RIL ensures that complaints and suggestions of its shareholders are
responded to. A comprehensive and informative shareholders’ reference is appended
highlighting various securities related transactions towards knowledge sharing.
The Board members are provided with necessary documents/ brochures, reports and internal
policies to enable them to familiarize with the Company’s procedures and practices. Periodic
presentations are made at the Board and Committee meetings on business and performance
updates of the Company, global business environment, business strategy and risks involved.
Detailed presentations on the Company’s business segments are made at separate meetings of the
Independent Directors from time to time. Quarterly updates on relevant statutory changes &
landmark judicial pronouncements encompassing important laws are regularly circulated to the
Directors. Site visits to various plant locations are organized for the Independent Directors to
enable them to understand the operations of the Company.

39
MEANS OF COMMUNICATION

● Quarterly results: The Company’s quarterly, half yearly and annual financial results
are sent to the Stock Exchanges and published in ‘Indian Express’, ‘Financial Express’
and ‘Loksatta / Navshakti’. Simultaneously, they are also put up on the Company’s
website (www.ril.com).
● News releases, presentations, among others: Official news releases and official media
releases are sent to Stock Exchanges and are displayed on its website (www.ril.com).
● Presentations to institutional investors & analysts: Detailed presentations are made to
institutional investors and financial analysts on the Company’s quarterly as well as
annual financial results. These presentations and Schedule of analyst or institutional
investors meet are also put on the Company’s website (www.ril.com) as well as sent to
the Stock Exchanges. No unpublished price sensitive information is discussed in the
meeting or presentation with institutional investors and financial analysts.
● Website: The Company’s website (www.ril.com) contains a separate dedicated
section ‘Investor Relations’ where shareholders’ information is available. The
Company’s Annual Report is also available in downloadable form.
● Annual Report: The Annual Report containing Audited Financial Statements, Audited
Consolidated Financial Statements, Directors’ Report, Auditors’ Report and other
important information. This information is circulated to the members and others
entitled thereto. The Management’s Discussion and Analysis (MD&A) Report forms
part of the Annual Report.
● Chairman’s Communiqué: The printed copy of the Chairman’s speech is distributed
to shareholders at Annual General Meetings. The document is also put on the
Company’s website (www.ril.com) and sent to the Stock Exchanges.
● Reminder to Investors: Reminders for unclaimed shares, unpaid dividend or
unpaid interest or redemption amount on debentures are sent to the shareholders /
debenture holders as per records every year.
● NSE Electronic Application Processing System (NEAPS): The NEAPS is a web-based
application designed by NSE for the Corporates. All periodical compliance filings like

40
 shareholding pattern, corporate governance report, media releases, statement of investor
complaints, among others are filed electronically on NEAPS.
● BSE Corporate Compliance & Listing Centre (the 'Listing Centre'): BSE’s Listing
Centre is a web-based application designed for corporates. All periodical compliance
filings like shareholding pattern, corporate governance report, media releases,
statement of investor complaints, among others are also filed electronically on the
Listing Centre.
● SEBI Complaints Redress System (SCORES): The investor complaints are processed
in a centralized web-based complaints redress system. The salient features of this system
are - Centralized database of all complaints. Online upload of Action Taken Reports
(ATRs) by concerned companies. Online viewing by investors of actions taken on the
complaint and its current status.
● Designated Exclusive email-id: The Company has designated the following email-ids
exclusively for investor servicing - 1. For queries on Annual Report:
investor_relations@ril.com 2.For queries in respect of shares in physical mode:
rilinvestor@karvy.com
● Shareholders’ Feedback Survey: The Company had sent feedback forms seeking
shareholders’ views on various matters relating to investor services and Annual Report.
The feedback received from shareholders is placed before the Stakeholders’
Relationship Committee.

41
4.8 CODE OF CONDUCT

The Company has in place a comprehensive Code of Conduct (The Code) applicable to the
Directors and employees. The Code is applicable to Non-Executive Directors including
Independent Directors to such extent as may be applicable to them depending on their roles and
responsibilities.
The Code gives guidance and support needed for ethical conduct of business and compliance of
law. The Code reflects the values of the Company. Customer Value, Ownership Mind-set,
Respect, Integrity, One Team and Excellence are the Core Values of Reliance Industries
Limited.

Our Code of Conduct is applicable to all the employees and members of the Board. The Code
provides guidance and support on conducting business in a dignified, distinctive and responsible
manner and ensures compliance with the law. We adhere to high ethical standards to ensure
integrity, transparency and accountability in dealing with all stakeholders. We have adopted
various codes and policies to carry out our duties in an ethical manner.
Some of these codes and policies are
● Code of Conduct
● Code of Conduct for Prohibition of Insider Trading.
● Health, Safety and Environment (HSE) Policy.
● Vigil Mechanism and Whistle Blower Policy.
● Policy on Materiality of and dealing with related party transactions.
● Corporate Social Responsibility Policy.
● Policy for Selection of Directors and determining Director’s Independence.
● Remuneration Policy for Directors, Key Managerial Personnel and other Employees.
● Policy for determining Material Subsidiaries.

“Our Code” is a public statement that Reliance is committed to doing the right thing. It serves as
a valuable resource to help employees and others make informed, ethical decisions based on
guiding principles.
We accord high value to our human capital and strive to ensure an ethical, safe and equal work
environment, which provides our people numerous avenues for professional as well as personal
42
development. We have an Ethics and Compliance Task Force which comprises the Reliance
Group Head of HR, General Counsel, Group Controller and Head-Fraud Risk Management. The
Code of Ethics and Compliance program is reviewed by the senior management periodically (at
least once a year). All our units aspire towards 100% compliance with local and national laws,
regarding ethics and human rights. We also take into account global standards and strive to
comply with all global norms on human rights, including the principles outlined in the United
Nations Universal Declaration of Human Rights (UDHR). Every employee is exposed to these
topics through structured training programs. Our existing induction program covers a half hour
module on the basics of human rights. All the non-supervisory permanent employees at our
manufacturing locations are covered under collective bargaining agreements with trade unions,
which ensure compliance with the local and national laws.

Our employees are our most valued assets. Health, safety and wellbeing of our employees and all
those associated with our company are vital to us. “Mission Wellness” is at all our
manufacturing and E&P locations as well as our offices are a testimony to our comprehensive
approach on promoting health and wellness. We have well-equipped Occupational Health
Centers (OHC) which conducts counseling for management of personal health and monitor the
health of employees on a regular basis.

Occupational Health and Safety is an integral part of our business philosophy and is one of the
important pillars of our sustainability strategy. We continuously strive to maintain high safety
standards and provide our workforce with a safe and healthy work environment. The safety of
our workforce is of paramount importance to us. We continuously aim at improving our safety
performance through the Health, Safety and Environment Management system. Our safety and
occupational health responsibilities are driven by our commitment to ensure zero harm to the
people we work with and to society, further creating an environment that ensures the well-being
of our employees.

Nothing is more important to Reliance than making sure we do what is right and nothing puts us
at risk more than failure to do it. In “Our Code” & “Code of Conduct” we are focused on the
most important principles and expectations rather than specifying detailed rules. It does not

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specifically address every potential form of unacceptable conduct, but we believe that we are
fully capable of making the right decisions when faced with difficult choices and that we will be
guided by our good judgments.

4.9 STRATEGY AND FRAMEWORK

Our strategy focuses on creating sustained value for our stakeholders whilst ensuring responsible
business practices. We aim to become the global leader in the business segments we operate in.
Our strategic objective is to build a sustainable organization that remains relevant to our
customers and also create a profitable growth for our shareholders. In all our operations, we
adopt best Global practices through safe operations, by adopting leading digital technology,
capital productivity, operating efficiency, and ethics. Our sustainability strategy is interwoven
into our overall business strategy. Through our existing experience, asset base and investments
in upcoming prospects, we are strategizing to leverage our current business with our future
endeavors. The eminent effects of economic development in India prove to be beneficial in
building competencies rolled out on a global scale. We seek internal and external perspectives
from all our stakeholders to identify and help us understand the risks and opportunities
associated with new and emerging issues.

Overall objective of our strategy is to reinforce the necessity to contribute to emerging market
demands. Through our existing potential and innovations, we aim to enhance the customer
satisfaction and ensure inclusive growth and development in India. To achieve our sustainability
objectives, we are streamlining our efforts into actionable measures for all our endeavors. Our
effort is to effectively address value creation of our Shareholders, Employees, Customers and
Society. We have linked our material topics to our strategic levers in order to identify specific
areas of improvement and address each of them effectively. Our sustainability strategy is
interwoven into our overall business strategy and our commitment to this journey drives our
sustainability agenda.

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4.10 CORPORATE SOCIAL RESPONSIBILITY AT RIL

Reliance has always made sustainable development the cornerstone of its business strategy to
achieve sustainable and profitable growth, creating in its wake thriving eco-systems around all its
businesses. To provide impetus to various developmental initiatives of RIL, Reliance Foundation
was set up in 2010 as an expression of its vision towards sustainable growth in India. India is a
nation of a billion dreams, a billion aspirations and above all great opportunities. To turn these
dreams into reality, especially for the vulnerable sections of the society, Reliance Foundation has
taken the path of inclusive development to address their basic needs. Reliance Foundation has
cumulatively touched the lives of 15 million people in over 13,500 villages and various urban
locations.

The Reliance Foundation (‘The Foundation’) was set up in 2010 as an umbrella organization to
implement the social sector initiatives of our Company. The Foundation has a holistic approach
towards development and lays emphasis on leveraging technology for development solutions.
To maximize its reach and improve outcomes, the Foundation has established strategic
partnerships with organizations that have the technical expertise and experience to undertake
various programs. We have undertaken our initiatives in compliance with Schedule VII of the
Companies Act, 2013. We currently focus on ushering change through the following pillars:

● Rural Transformation: Bridging the rural-urban gap by improving livelihoods

and addressing poverty, hunger and malnutrition.
● Health: Providing affordable solutions for quality healthcare through improved access to
healthcare services and awareness.
● Education: Ensuring access to quality education, training and skill
enhancement opportunities.
● Sports for Development: Focusing on using sports as a medium to encourage
learning and breed leadership among youth.
● Environment: Promoting environmental sustainability through ecological
balance, conservation of natural resources and promoting biodiversity.
● Disaster Response: Managing and responding to disasters across India.

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 ● Arts, Culture & Heritage: Promoting and protecting India’s rich culture and heritage.

We seek to impact people’s lives through our Corporate Social Responsibility (CSR) initiatives.
Our CSR policy is aimed at improving lives and livelihood for a stronger and inclusive India.
Central to our philosophy is the commitment to enhance the quality of life of people from
marginalized and vulnerable communities, by empowering them and catalyzing change through
innovative and sustainable solutions. Our CSR initiatives aim to be replicable, scalable and
sustainable in the long term. These initiatives are aimed at promoting equitable economic
growth and ensure a more sustainable, inclusive and people-centric development. Our initiatives
are in alignment with the Sustainable Development Goals (SDGs), outlined in the United
Nations 2030 Agenda for Sustainable Development.

4.11 INTERNAL CONTROL SYSTEMS

In addition to external firms, we have developed the following internal control systems to help us
achieve our objectives of accountability, transparency and fairness:

● We have developed an Internal Audit Cell, which serves the purpose of an

independent internal auditor. The cell reviews internal controls, operating systems and
procedures.
● We have established a Legal Compliance Cell to ensure business is conducted with
the highest standard of legal compliance.
● We have instituted a Legal Compliance program in conformity with the best
international standards, supported by a robust online system that covers our
manufacturing units as well as subsidiaries. The purview of this system includes various
statutes, such as industrial & labor laws, taxation laws, corporate & securities laws and
health, safety & environment regulations.

Through the use of technology, we strive to ensure robustness and integrity of financial reporting
and internal controls, asset protection and optimization, accurate and timely compilation of
financial reporting and compliance with statutory laws, regulations and company policies.
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4.12 CORPORATE GOVERNANCE PRACTICES IN RIL

Governance mechanisms evolve to warrant the highest standards of accountability, transparency

and fairness. We constantly strengthen our processes and systems by adopting emerging best
practices being followed worldwide. Some of the prominent changes we have implemented
include:
● A designated Lead Independent Director with a defined role.
● A review of all securities related fillings with Stock Exchanges and SEBI, conducted
by the Stakeholders’ Relationship Committee each quarter.
● Quarterly secretarial audits conducted by an independent company secretary, who is
in full-time practice.
● Independent Board committees for matters related to Corporate Governance and
stakeholders’ interface and nomination of Board members. An internal audit is
also conducted by an independent auditor.
● A Sustainability Council to integrate sustainability considerations in decision making
and improve performance on sustainability indicators. The major responsibilities of the
council are to identify material topics, risks & opportunities and define broad strategies
and initiatives. The council meets periodically are to review performance metrics,
sustainability initiatives and results.

At Reliance Industries Limited (RIL), Corporate Governance is all about maintaining a valuable
relationship and trust with all stakeholders. We consider stakeholders as partners in our success,
and we remain committed to maximizing stakeholders' value, be it shareholders, employees,
suppliers, customers, investors, communities or policy makers. This approach to value creation
emanates from our belief that sound governance system, based on relationship and trust, is
integral to creating enduring value for all. We have a defined policy framework for ethical
conduct of businesses. We believe that any business conduct can be ethical only when it rests on
the six core values of Customer Value, Ownership Mindset, Respect, Integrity, One Team and
Excellence.

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The effective implementation of good governance practices would ensure investor confidence in
the corporate companies which will lead to greater investment in them ensuring their sustained
growth. Thus good corporate governance would greatly benefit the companies enabling them to
thrive and prosper.

Further, in the context of liberalization and globalisation there is growing realization in the
emerging economies including India that a country’s business environment must be maintained
and operated in a manner that is conducive to investors’ confidence so that both domestic and
foreign investors are induced to make adequate investment in corporate companies. This will be
conducive to rapid capital formation and sustained growth of the economy

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 CHAPTER 5

SUMMARY, FINDINGS & SUGGESTIONS

5.1 SUMMARY

Corporate Governance is basically a detailed disclosure of information and an account of an

organization’s financial situation, performance, ownership & governance, relationship with
shareholders and commitment to business ethics & values. The relevance of corporate
governance has increased several times since the concept was introduced. With the introduction
of globalization and competition, managing shareholder expectations is no longer the mantra for
success.
Corporate Governance is the art of directing and controlling the organization by balancing the
needs of the various stakeholders. This often involves resolving conflicts of interest between the
various stakeholders and ensuring that the organization is managed well ensuring that the
processes, procedures and policies are implemented according to the principles of transparency
and accountability set by the organization.
Corporate governance is a technique by which a business corporation is directed and controlled.
This technique specifies the distribution of rights and responsibilities among the company’s
different actors including the Board, management, shareholders and stakeholders. Good
corporate governance practice enhances transparency and accountability. This system increases
long term shareholder value and at the same time protects the interests of the other stakeholders.
Corporate governance separates the ownership and control between the shareholders and
management body.

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5.2 FINDINGS

Corporate Governance (CG) practices have emerged as a fundamental theme of modern

corporate regulatory system. In simple terms, corporate governance refers to a code of conduct
adopted by the management of company while exercising its powers. The present study is an
attempt to assess the corporate governance practices through the Board of Directors of Reliance
Industries Limited (RIL).
The findings of the study reveal that RIL has complied 100% compliance on several aspects of
board of directors as per Clause 49 of the listing agreement of SEBI during the selected years
under study.
Thus, RIL has shown good performance in maintaining the CG standards and attaining the
quality of governance practices through board of directors.
Corporate governance through the board of directors of RIL is based on the principles of
integrity, fairness, equity, transparency, accountability and commitment to values.
The governance and code of conduct has improved in the company over the past few years, as
their commitment to the six core values of Customer Value, Ownership Mindset, Respect,
Integrity, One Team and Excellence.

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5.3 SUGGESTIONS

 The department should develop appropriate tools to support staff in understanding

and implementing integrated risk management at both the corporate and activity
level.
 The department should modify its existing reporting processes to include an analysis on
how all its existing activities are mitigating the key risks identified in the Corporate
Risk Profile.
 Improvement in communication and interaction by the company with its investors and
other stakeholders.
 Communication aims at ensuring that all shareholders regularly receive the
same information at the same time.
 The insight of the board of directors into the dialogue may possibly be established
through participation in investor meetings or reporting from such meetings, or
through regular reporting from the executive board.
 Corporate Social Responsibility (CSR) is a movement within the business world that
advocates a larger ethical and social role for corporations. Boards of directors structure
corporations to maximize profits for their shareholders, and as a result, according to
advocates of CSR, they frequently exploit or neglect the larger community and the
natural environment. People who make CSR guidelines should design them to amend
this problem and to transform large companies into productive corporate citizens who
contribute in positive ways to the community.

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 CONCLUSION

More the level of corporate governance, the stronger is the company in the eyes of the
shareholders of the company. The independent and the active directors are the ones who infuse
and contribute towards displaying the corporate as that of having a positive outlook. When it
comes to investment, the investors also seek to find the companies with stronger corporate
governance in them. The corporate governance requirements in RIL deliberates the company to
audit their working culture and give the shareholders community a more positive outlook as their
actions have moral and legal implications. The new norms after the Companies Act 2013 came
are very balanced and innovative. Shareholders are involved in the decision making of the
company and various safeguards have been put up in order so that the interests of the
shareholders and the society as a whole are not sidelined. Corporate Governance imbibes the
much required transparency in the corporates. It is evident from above that it is essential that
good governance practices must be effectively implemented and enforced preferably by self-
regulation and voluntary adoption of ethical code of business conduct and if necessary through
relevant regulatory laws and rules framed by Government or its agencies such as SEBI, RBI.

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 BIBLIOGRAPHY

 RIL (Wikipedia) - https://en.wikipedia.org/wiki/Reliance_Industries_Limited

 Reliance official website - https://www.ril.com/
 https://www.ril.com/OurCompany/Manufacturing.aspx
 https://www.ril.com/Sustainability/HealthSafety.aspx
 https://www.ril.com/ar2014-15/corporate-governance-report.html
 https://www.ril.com/ar2014-15/business-responsibility-report.html
 https://www.ril.com/ar2014-15/shareholders-referencer.html
 https://www.ril.com/DownloadFiles/CorporateGovernanceReport/CG%20Report%20201
7-18.pdf
 https://www.ril.com/ar2018-19/pdf/corporate_governance.pdf
 https://www.geekyreality.com/company/203/reliance-industries-limited-growth-is-life/
 https://www.ril.com/InvestorRelations/FinancialReporting.aspx
 https://www.ril.com/ar2018-19/ril-annual-report-2019.pdf

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