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CHAPTER I
INTRODUCTION
Reliance Industries Limited (RIL) (BSE: 500325, NSE: RELIANCE, LSE: RIGD) is an Indian
conglomerate company headquartered in Mumbai, Maharashtra, India. The company operates
through three business segments: petrochemicals, refining, and oil and gas, other divisions of the
company include textiles, retail business, special economic zone (SEZ) development and
telecom/broadband business. RIL is one of the largest publicly traded company in India by
market capitalization and is the second largest company in India by revenue after Indian Oil
Corporation. It is also India's largest private sector company by revenue and profit. The company
is ranked 99th on Fortune Global 500 list of the world's biggest corporations for the year 2012.
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Reliance Industries
Type Public
Traded as BSE: 500325,NSE: RELIANCE,LSE: RIGD
BSE SENSEX Constituent
CNX Nifty Constituent
Industry Conglomerate
Predecessors Reliance Commercial Corporation
Founded 1966
Founders Dhirubhai Ambani
Headquarters Mumbai, Maharashtra, India
Area served Worldwide
Key people Mukesh Ambani
(Chairman and MD)
Products Crude oil, natural
gas,petrochemicals, petroleum,polyester, textiles, retail,telecom, media
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Revenue US$ 75 billion (2014)
Operating
income
US$ 7.14 billion (2013)
Profit US$ 3.86 billion (2013)
Total assets US$ 58.67 billion (2013)
Total equity US$ 31.66 billion (2013)
Employees 23,519 (2013)
Website www.ril.com
Stock
According to the company website "1 out of every 4 investors in India is Reliance
shareholder."Reliance has more than 3 million shareholder, making it one of the world's most
widely held stock. Reliance Industries ltd. Subsequent to its split in Jan. 2006 has continued to
grow. Reliance Company has been among the best company performing in the Indian Stock
Market.
Products
Though the company's petrochemicals, refining, and oil and gas-related operations form the
incore of its business, other dividors of the company include cloth, retail business and special
economic zone (SEZ) development. Reliance Retail has entered into the fresh foods market as
Reliance Fresh.
RIL is to invest $10 billion over the next few years in its new aerospace division which will
design, develop, manufacture, equipment and components, including airframe, engine, radars-
avionics and accessories for military and civilian aircraft. helicopters, unmanned airborne
vehicles and aerostats. It had applied for industrial license in early July 2012. This decision
comes after the creation of Reliance Aerospace Technologies 11rt Ltd and Reliance Security
Solutions Ltd.
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It has a wide range of products from petroleum products, petrochemicals, to garments, reliance
retail has entered into the fresh food market as Reliance Fresh and launched a new chain called
Delight Reliance Retail and NOVA chemicals have signed a letter of intent to make energy
efficient structures. The primary business of the company is petroleum refining and
petrochemicals. It operates a33 million tone refinery at Jamnagar in the Indian state of Gujarat.
Reliance has also completed a second refinery of 29 million tones at the same site which started
operation in December 2008.The Company is also involved in oil and gas exploration and
production. In 2002, it stuck a major find on India’s eastern coast in the Krishna Godavari basin.
Gas production from this find was started on April 22009. As of the end of third quarter of
20A9-10, gas production from the KG D6 ramped up to 60 MMSCMD.
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CHAPTER II
Product Flow Chart
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RIL’s Growth Story
Fiscal 2AA4 will go down as a record year in the history of Reliance Industries. The company's
net profits crossed the $1 billion mark. Over the last 25 years, RIL has seen its sales growth from
Rs.120 crore (Rs 1.2 billion) to Rs 74,418 crore (Rs 744.18 billion). Net profits during the period
grew at a compounded annual growth rate of 26 per cent to Rs 5,160 crore (Rs 51.6 billion). This
remarkable performance was reflected in the stock markets too shares of Reliance gave a return
of 39 per cent on an annualized basis.
Figuring among the top 150 companies globally in terms of net profit and among the top 450 in
terms of sales, Reliance's past performance has been admirable. But what is even more surprising
is that even now the company is not showing any signs of sluggishness. While announcing the
annual results for fiscal 2004, vice-chairman and managing director Anil Ambani said the
company would continue to grow at the rate of 20 per cent over the next five years -- that is
almost double the country's expected economic growth rate. Since RIL accounts for 12 percent
of the Sensex's market-cap and one out of four investors in Indian equities is a Reliance
shareholder, RIL's future performance is significant for the overall market performance. And
today in 2ilt,?its turnover is Rs.339,792 Cr. lt RIL contributes 14%of India's total Export .7.8%
weightage in the NSE Nifty, 5.5% of the government of India's indirect tax revenues ,9.3%
weightage in the BSE Sensex ,4% of total capitalization in India.
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Mission & Vision
Continuously innovate to remain Farmers in human progress by Hamessing science &
technology in the petrochemicals domain.
Our mission
Be a Globally preferred Business associate with response to concern for ecology, society, &
Shareholders value.
Values and quality policy your values
Integrity respect to peoples, unity of purpose, outside-in Focus, Agility and innovation
Quality policy
"Bare committee to meet customers' requirements through continual improvement of our quality
image system. We shall sustain organizational excellence through visionary leadership and
innovative efforts.
MITESTONES
Staring of as a small textile company, Reliance has in its journey crossed several milestones to
become a fortune 500 companies in less than 30 decades. Reliance continues to cross newer and
bigger miles in its quest for what is known as “Growth of Life”.
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AWARDS
RIL believe in GROWTH THROUGH RECOGNITION
Leadership
Shri Mukesh Ambani, Chairman & Managing Director, RIL has been nominated to a 'key
advocacy group of Millennium Development Goals', whose mandate includes finding ways to
fight socio-economic evils such as poverty, by the United Nations in 2010. Shri Ambani is the
only Indian to be a part of the MDG Advocacy Group that comprises eminent international
personalities.
Shri Mukesh Ambani has been re-elected as Vice Chairman of the Business Council for
Sustainable Development’s (WBCSD) Executive Committee or a second consecutive term in
2010.
The Foundation Board of World Economic Forum (WEF) elected Shri Mukesh Ambani on its
Board. WEF's mission is to improve the stats of &e world and the elected board members make
valuable contributions to this mission through their involvement.
Shri Mukesh Ambani received prestigious “ Dwight D Eisenhower Global Leadership Award' at
the Business Council for International Understanding's Annual Global Awards Gala in 2010.
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Corporate Ranking & Ratings:
RIL continues to be featured, for the sixth consecutive year, in the Fortune Global 500 list of the
Worlds Largest Corporations, ranking for 2010 is as follows:
Ranked 175 based on Revenues
Ranked 100 based on Profits
RIL has been ranked at 20th position, on the basis of sales, in the ICIS Top 100 Chemicals
Companies list. RIL is the only Indian company in the world's Top 20 chemical companies in the
global ranking. RIL had also been named as 8th biggest gainer in the list in terms of operating
profits. RIL is the only Indian company to get a perfect score from CLSA Asia-Pacific Markets
(CLSA) in a list of Asia's best companies in terms of CSR and termed the Company as the
region's 'Corporate Good Guy'. In its Ethical Asia' 2010 report, CLSA has named RIL among its
top picks for providing very- good data and going well beyond required disclosure. RIL is rated
as the 33rd most innovative Company in the World in a survey conducted by the US financial
publication- Business Week in collaboration with the Boston Consulting Group (BCG). Further,
in 2010, BCG has ranked RIL second amongst the world's 10 biggest 'Sustainable Value
Creators', companies for creating the most shareholder value for the period 2000 to 2009.
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Project Management
E&P Division received the Petrotech-2010 Special Technical Award in the Project Management'
category for completion of their Krishna Godavari Gas project ahead of schedule.
Health, Safety and Environment
Allahabad Manufacturing Division received a rating of 90% for its environmental
initiatives from British Safety Council in 2010.
Barabanki Manufacturing Division received '5 Star Rating on BSC Environment' from
British Safety Council in 2010.
Dahej Manufacturing Division received 'Greentech Environment Excellence Award 2010
Dahej Manufacturing Division received the National Award for the Prevention of
Pollution in Petrochemicals Sector' for its excellence in environment practices from the
Ministry of Environment & Forests, Government of India " in 2010.
Dahej Manufacturing Division received Our Cup of Joy Indies Best Practices on Water
Confederation of Indian Industry (CII) October 2010.
RIL have got many such awards in different categories such as Technology, patents,
R&D and Innovation, Retail.
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Commitments of Reliance Industries
Reliance believes that any business conduct can be ethical only when it rests on the nine Core
values of Honesty, Integrity, Respect, Fairness, Purposefulness, Trust, Responsibility,
Citizenship and Caring.
The essence of these commitments is that each employee conducts the company’s business with
integrity, in compliance with applicable laws, and in a manner that excludes considerations of
personal advantage.
We do not lose sight of these values under any circumstances, regardless of the goals we have to
achieve. To us, the means are as important as the ends.
We care about:
Quality
Research & Development
Health- Safety & Environment
Human Resource Development
Energy Conservation
Corporate citizenship
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CHAPTER III
Reliance lndustries LimitedComparative Balance Sheet as at 31st March 2012 and
31stMarch 2011
Mar '12 (Amt in Cr.) Mar '11 (Amt in Cr.)
Sources Of FundsTotal Share Capital 3,271.00 3,273.37Equity Share Capital 3,271.00 3,273.37Share Application Money
0 0
Preference Share Capital 0 0Reserves 1,59,698.00 1,42,799.95Revaluation Reserves 3,127.00 5,467.00Net worth 1,66,096.00 1,51,540.32Secured Loans 6,969.00 10,571.21Unsecured Loans 51,658.00 56,825.47Total Debt 58,627.00 67,396.68Total Liabilities 2,24,723.00 2,18,937.00
Application Of FundsGross Block 2,09,552.00 2,21,251.97Less: Accum. Depreciation
91,770.00 78,545.50
Net Block 1,17,782.00 1,42,706.47Capital Work in Progress
4,885.00 12,819.56
Investments 54,008.00 37,651.54Inventories 35,955.00 29,825.38Sundry Debtors 18,424.00 17,441.94Cash and Bank Balance 889 604.57Total Current Assets 55,268.00 47,871.89Loans and Advances 24,573.00 17,320.60Fixed Deposits 38,709.00 26,530.29Total CA, Loans & Advances
1,18,550.00 91,722.78
Deferred Credit 0 0
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Current Liabilities 66,244.00 61,399.87Provisions 4,258.00 4,563.48Total CL & Provisions 70,502.00 65,963.35Net Current Assets 48,048.00 25,759.43Miscellaneous Expenses 0 0
Total Assets2,24,723.00 2,18,937.00
Contingent Liabilities 45,831.00 41,825.13Book Value (Rs) 498.21 446.25
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Reliance Industries Limited
Cash Flow Statement for the year ended 31st March, 2012 and 31st March, 2011
Mar '12 (Amt
in Cr.)
Mar '11 (Amt
in Cr.)
Net Profit Before Tax 25750 25242.24
Net Cash From Operating Activities 26974 33280.52
Net Cash (used in)/from -3046 -20332.88
Investing Activities
Net Cash (used in)/from Financing Activities -11465 724.57
Net (decrease)/increase In Cash and Cash
Equivalents12463 13672.21
Opening Cash & Cash Equivalents 27135 13462.65
Closing Cash & Cash Equivalents 39598 27134.86
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Reliance Industries Limited
Statement of Profit and Loss for the year ended 31st March, 2012 and 31st March, 2011
Mar '12
(Amt in Cr.)
Mar '11
(Amt in Cr.)
Income
Sales Turnover 3,39,792.00 2,58,651.15
Excise Duty 9,860.00 10,515.09
Net Sales 3,29,932.00 2,48,136.06
Other Income 5,981.00 3,358.61
Stock Adjustments 872 3,243.05
Total Income 3,36,785.00 2,54,737.72
Expenditure
Raw Materials 2,79,737.00 1,98,076.21
Power & Fuel Cost 4,094.00 2,255.07
Employee Cost 2,857.00 2,621.59
Other Manufacturing Expenses 2,557.00 2,915.44
Selling and Admin Expenses 7,510.00 7,207.83
Miscellaneous Expenses 255 500.52
Preoperative Exp Capitalised -37 -30.26
Total Expenses 2,96,973.00 2,13,546.40
Operating Profit 33,831.00 37,832.71
PBDIT 39,812.00 41,191.32
Interest 2,668.00 2,328.30
PBDT 37,144.00 38,863.02
Depreciation 11,394.00 13,607.58
Other Written Off 0 0
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Profit Before Tax 25,750.00 25,255.44
Extra-ordinary items 0 0
PBT (Post Extra-ord Items) 25,750.00 25,255.44
Tax 5,710.00 4,969.14
Reported Net Profit 20,040.00 20,286.30
Total Value Addition 17,236.00 15,470.19
Preference Dividend 0 0
Equity Dividend 2,531.00 2,384.99
Corporate Dividend Tax 410 386.9
Per share data (annualised)
Shares in issue (lakhs) 32,710.59 32,733.74
Earning Per Share (Rs) 61.26 61.97
Equity Dividend (%) 85 80
Book Value (Rs) 498.21 446.25
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CHAPTER IV
Comparative accounting policies
A. Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost convention, except for certain
fixed assets which are revalue, in accordance with the generally accepted accounting principles
in India and the provisions of the Companies Act, 1956.
B. Use of Estimates
The preparation of financial statements requires estimates and assumptions to be made that affect
the reported amount of assets and liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting period. Difference between the
actual results and estimates are recognised in the period in which the results are know/
materialised.
C. Own Fixed Assets
Fixed Assets are stated at cost net of recoverable taxes and includes amounts added on
revaluation, less accumulated depreciation and impairment loss, if any. All costs, including
financing costs till commencement of commercial production, net charges on foreign exchange
contracts and adjustments arising from exchange rate variations attributable to the fixed assets
are capitalised.
D. Leased Assets
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a) Operating Leases: Rentals are expensed with reference to lease terms and other considerations'
b) (I) finance leases prior to 1st April, 200l: Rentals are expensed with reference to lease terms
and other considerations. (II) Finance leases on or after 1st April, 2001the lower of the fair value
of the assets and present value of the minimum lease rentals is capitalised as fixed assets with
corresponding amount shown as lease liability. The principal component is charged to profit and
loss accent.
(c) However, rentals referred to in (a) or (b)
(l) Above and the interest component referred to in (b) (a) above pertaining to the period up to
the date of commissioning of the assets are capitalised. d) All assets given on finance lease are
shown as receivables at an amount equal to net investment in the lease, initial direct costs in
respect of lease are expensed in the year in which such costs are incurred. Income from lease
assets is accounted by applying interest rate implicit in the lease to the net investment.
E. Intangible Asset
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated
amortisation / depletion. AII costs, including financing costs till commencement of commercial
production, net charges on foreign exchange contracts and adjustments arising from exchange
rate variations attributable to the intangible assets are capitalised.
F. Depreciation and Amortization
Depreciation on fixed assets is provided to the extent of depreciable amount on written down
value method (WDV) at the rates and in the manner prescribed in Schedule XIV to the
Companies Act, 1956 over their useful life except: on fixed assets pertaining to refining Segment
and SEZ units, deprecation is provided on Straight Line Method (SLM) over their l useful life;
on fixed bed catalyst with a life of 2 years or more, depreciation is provided over its useful
life ,on fixed bed catalyst having life of less than 2 years,100% deprecation is provided in the
year of addition; on additions or extensions forming an integral part of existing plants ,including
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incremental cost arising on account of translation of foreign currency liabilities for acquisition of
fixed assets and insurance spares, depreciation is provided as aforesaid over the residual life of
the respective plants; premium on leasehold land is amortized over the period of lease; technical
knowhow is amortized over the useful life of the underlying assets and computer software is
amortized over a period of 5 years ;on intangible assets - development rights, depletion is
provided in proportion of oil and gas production achieved via-a-via the proved reserves (net of
reserves to be retained to cover abandonment costs as per the production sharing conflict and the
Government of India’s share in the reserves considering the estimated future expenditure on
developing the reserves as per technical evaluation; intangible assets - others are amortized over
the period of agreement of right to use ,provided in case of jelly the aggregate amount amortized
to date is not less that the aggregate rebate availed by the Company; on amounts added on
revaluation, deprecation is provided as aforesaid over the residual life of the asset as certified by
the valuers on assets acquired under finance lease from 1st April 20A1 depreciation is provided
over the lease term.
G. Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An
impairment loss is charged & loss a/c in the year in which asset is identified as impaired. The
impairment loss recognized in prior accounting period is reversed if there has been a change in
the estimate of recoverable amount.
H. Foreign Currency Transactions
(a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing
on the date of the transactions or that approximates the actual rate at the date of the transactions.
(b) Monetary items denominated in foreign currencies at the yearend are restated at year end
rates .In case of items which are covered by forward exchange contracts, the difference between
the yearend rate and rate on the date of the contract is recognized as exchange difference and the
premium paid on forward contracts is recognised over the life of the contract.
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(c) Non monetary foreign currency items are carried at cost.
(d) In respect of branches, which are integral foreign operations, all transactions are translated at
rates prevailing on the date of transaction or that approximates the actual rate at the date of
transactions. Branch monetary assets and liabilities are restated at the yearend rates.
(e)Any income or expense on account of exchange difference either on settlement or on
translation is recognised in the Profit & loss account except in case of long term liabilities, where
the relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of
such assets.
I. Investments
Current investments are carried at lower of cost and quoted/fair value; computed category
wise .Long term Investments are stated at cost .Provision for demotion in the value of long-term
investments is made only if such a decline is other than temporary.
J. Inventories
Items of inventories are measured at lower of cost and net realizable value after providing for
obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and
other costs including manufacturing overheads incurred in bringing them to their respective
present location and condition. cost of raw materials, process chemicals, stores and spares,
packing materials, trading and other products are determined on weighted average basis. By –
products are valued at net realizable value.
K. Revenue Recognition
Revenue is recognized only when it can be reliably measured and it is reasonable to expect
ultimate collection. Revenue from operations include sale of goods ,services ,sales tax , service
tax, excise duty and sales during trial run period adjusted for discounts (net), Value Added Tax
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(VAT) and gain /loss on corresponding hedge contracts .Dividend Income is recognized when
right to receive is established. Interest income is recognized on time proportion basis taking into
account the amount outstanding and rate applicable.
L. Excise Duty / Service Tax and Sales Tax / value Added tax
Excise duty / Service tax is accounted on the basis of both, payments made in respect of goods
cleared / services provided as also provision made tor goods lying in bonded warehouses. Sales
tax / Value added tax paid is charged to Profit and Loss account.
M. Employee Benefits
(i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the
profit and loss account of the year in which the related service is rendered.
(ii) Post employment and other long term employee benefits are recognized as an expense in the
Profit and Loss account for the year in which the employee has rendered services. The expense is
recognized at the present value of the amounts payable determined using actuarial valuation
techniques. Actuarial gains and losses in respect of post employment and other long term
benefits are charged to the Profit and Loss account.
(iii) In respect of employee’s stock option, the excess of fair price on the date of grant over the
exercise price is recognized as deferred compensation cost amortized over the vesting period"
N. Employee Separation Costs
Compensation to employees who have opted for retirement under the voluntary retirement
scheme of the Company is charged to the Profit and Loss account in the year of exercise of
option.
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O. Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are
capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other borrowing costs are charged
to Profit and Loss account.
P. Financial Derivatives and commodity Hedging Transactions
In respect of derivative contracts, premium paid, gains / losses on settlement and losses on
restatement are recognized in the Profit and Loss account except in case where they relate to the
acquisition or construction of fixed assets, in which case, they are adjusted to the carrying cost of
such assets.
Q. Accounting for Oil and Gas Activity
The Company has adopted Full Cost Method of accounting for its Oil and Gas activity and all
costs incurred in acquisition, exploration and development are accumulated considering the
county as a cost centre. Oil and Gas Joint Ventures are in the nature of Jointly Controlled Assets.
accordingly, assets and liabilities as well as income and expenditure are accounted on the basis
of available information on line by line basis with similar items in the Company’s financial
Statements, according to the participating interest of the company.
R. Provision for Current and Deferred Tax
Provision for current tax is made after taking into consideration benefits admissible under the
provisions of the Income-tax Act, 1961 . Deferred tax resulting from "timing difference" between
taxable and accounting income is accounted for using the tax rates and laws that are enacted or
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substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried
forward only to the extent that there is a virtual certainty that the asset will be realized in future.
S. Premium on Redemption of bonds / debentures
Premium on redemption of bonds / debentures, net of tax impact, are adjusted against the
Securities Premium Account.
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CHAPTER V
Conclusion
The company's overall position is at a very good position. The company achieves sufficient T
years. The long term solvency position of the company is very good. The company achieves
sufficient profit in past four years. The long term solvency position of the company is very good.
The company maintains low liquidity to achieve the high profitability. The company distributes
dividends every year to its share holders. The profit of the company decreased in the last year
due to maintaining the comparatively high liquidity. The net working capital of the company is
maximum in last to last year.
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