A Project

On

Financial Statement of Reliance Industries Limited

Of
Entreprenuership Management
Submitted to
UNIVERSITY OF MUMBAI

Submitted By
MANDAR A. BHOIR
Roll No. 63

MASTERS IN COMMERCE - MANAGEMENT (Sem IV)

UNDER THE GUIDANCE OF:

Prof.
RIZVI COLLEGE OF ARTS, SCIENCE, COMMERCE
Bandra (West), Mumbai
Academic Year
2014-2015

DECLARATION

Myself, Bhoir Mandar Ashok of

Rizvi College of Arts, Science & Commerce studying

M.COM-Sem-IV hereby declare that I have completed this project on Financial Statement of
Reliance Industries Limited in Academic Year 2014- 2015.

The information submitted in this project is true & original to the best of my knowledge.

DatePlace-MUMBAI

(BHOIR MANDAR ASHOK)

CERTIFICATE

This is to certify that MANDAR BHOIR student of M.Com-IV class, Roll No. 63 of the
academic year 2014-15 studying at Rizvi College of Arts, Science & Commerce, has successful
completed the project entitled Financial Statement of Reliance Industries Limited

____________________

Prof.

______________________

Prof. Qamar Sir

(M.Com Co-ordinator)

___________________

______________________

External Examiner

Dr. Farooqui M.Z

(Principal)

ACKNOWLEDGMENT

I owe a great many thanks to a great many people who helped and supported me during
this project.

My deepest thanks to the Guide of this project Professor

, for guiding and

correcting various documents of mine with attention and care. He has taken pain to go through
the project and make necessary correction as and when needed.

I would also thank my Institution and my faculty members without whom this project
would have been a distant reality. I also extend my heartfelt thanks to my family and wellwishers.

Executive Summary

The project assigned to me was to study the financial health of any organization in the
country. I decided to choose one of Indias largest companies in a sector that has rapidly grown
over the last few years and a company where leaders like Mr. Dhirubhai Ambani, or rather, a
company that has been made Mr. Dhirubhai Ambani.

Through this report, I try and analyze the financial environment in which Reliance
Industry Limited is operating.

Through a thorough financial analysis, my aim to understand the financial factors is

influencing the company and its decision making. Later, I try and evaluate the various ratios to
appreciate their impact on companys performance over the last four years

The financial statements of last four years are identified, studied and interpreted in light
of companys performance. Critical decisions of distributing dividends, Issue of bonus
Debentures and other current news are analyzed and their impact on the bottom line of the
company is assessed.

Finally, I study ratio analysis, fund flow analysis and cash flow analysis of the company
to analyzing the financial position of the company in last four years.

Introduction

The study of financial statement is prepared for the purpose of presenting a periodical
review or report by the management of and deal with the state of investment in business and
result achieved during the period under review. They reflect the financial position and operating
strengths or weaknesses of the concern by properly establishing relationship between the items
of the balance sheet and remove statements.

Financial statement analysis can be under taken either by the management of the firm or
by the outside parties. The nature of analysis defers depending upon the purpose of the analysis.
The analyst is able to say how well the firm could utilize the resource of the society in generating
goods and services. Turnover ratios are the best tools in deciding these aspects.

Hence it is overall responsibility of the management to see that the resource of the firm is
used most efficiently and effectively and that the firms financial position is good. Financial
statement analysis does indicate what can be expected in future from the firm.

Company Profile
The Reliance group, founded by Dhirubhai H Ambani (1932-2002), is Indias largest private
sector enterprise, with businesses in the energy and material value chain. The flagship company,
Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector
company in India. The chairman of the company is Mukesh Ambani.
The company is Indias largest petrochemical firm and among the countrys largest companies
(along with the likes of Indian Oil and Tata Group). Oil refining and the manufacture of
polyfines account for nearly all of Reliances sales. It also makes textiles and explores for oil and
gas, though those businesses are relatively small. In 2009 the company merged with its oil and
gas refining subsidiary (Reliance Petroleum) in order to boost the operational and financial
synergies of Reliance as a major refining company.

Reliance Industries Limited (NSE: RELIANCE) is India's largest private sector conglomerate
(by market value) , with an annual turnover of US $ 35.9 billion and profit of US$ 4.85 billion
for the fiscal year ending in March 2008 making it one of India's private sector Fortune Global
500 companies, being ranked at 206th position (2008). It was founded by the Indian industrialist
Dhirubhai Ambani in 1966. Ambani has been a pioneer in introducing financial instruments like
fully convertible debentures to the Indian stock markets. Ambani was one of the first
entrepreneurs to draw retail investors to the stock markets. Critics allege that the rise of Reliance

Industries to the top slot in terms of market capitalization is largely due to Dhirubhai's ability to
manipulate the levers of a controlled economy to his advantage. Though the company's oilrelated operations form the core of its business, it has diversified its operations in recent years.
After severe differences between the founder's two sons, Mukesh Ambani and Anil Ambani, the
group was divided between them in 2006. In September 2008, Reliance Industries was the only
Indian firm featured in the Forbes's list of "world's 100 most respected companies
Stock
According to the company website "1 out of every 4 investors in India is a Reliance
shareholder.. Reliance has more than 3 million shareholders, making it one of the world's most
widely held stocks. Reliance Industries Ltd, subsequent to its split in January 2006 has continued
to grow. Reliance companies have been among the best performing in the Indian stock market.
Products
Reliance Industries Limited has a wide range of products from petroleum products,
petrochemicals, to garments (under the brand name of Vimal), Reliance Retail has entered into
the fresh foods 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 a 33
million tone refinery at Jamnagar in the Indian state of Gujarat. Reliance has also completed a
second refinery of 29 million tons at the same site which started operations in December 2008.
The company is also involved in oil & gas exploration and production. In 2002, it struck a major
find on India's eastern coast in the Krishna Godavari basin. Gas production from this find was

started on April 2, 2009. As of the end of 3rd quarter of 2009-2010, gas production from the KG
D6 ramped up to 60 MMSCMD.
Subsidiaries
Major Subsidiaries & Associates

Reliance Petroleum Limited (RPL) was a subsidiary of Reliance Industries Limited

(RIL) and was created to exploit the emerging opportunities, creating value in the
refining sector worldwide. Currently, RPL stands amalgamated with RIL.

Reliance Life Sciences is a research-driven, biotechnology-led, life sciences organization

that participates in medical, plant and industrial biotechnology opportunities. Specifically,
these relate to Biopharmaceuticals, Pharmaceuticals, Clinical Research Services,
Regenerative Medicine, Molecular Medicine, Novel Therapeutics, Bio-fuels, Plant
Biotechnology and Industrial Biotechnology.

Reliance Industrial Infrastructure Limited (RIIL) is engaged in the business of setting

up / operating Industrial Infrastructure that also involves leasing and providing services
connected with computer software and data processing.

Reliance Institute of Life Sciences (Rils) established by Dhirubhai Ambani Foundation, is

an institution of higher education in various fields of life sciences and related
technologies.

Reliance Logistics (P) Limited is a single window solutions provider for transportation,
distribution, warehousing, logistics, and supply chain needs, supported by in house state
of art telemetric and telemetry solutions.

Reliance Clinical Research Services (RCRS), a contract research organization (CRO) and
wholly owned subsidiary of Reliance Life Sciences, has been set up to provide clinical
research services to pharmaceutical, biotechnology and medical device companies.

Reliance Solar, The solar energy initiative of Reliance aims to bring solar energy systems
and solutions primarily to remote and rural areas and bring about a transformation in the
quality of life.

Relicord is the first and one of the most dependable stem-cell banking services of South
East Asia offered by Mukesh Ambani controlled Reliance Industries.

Reliance's Oil & Gas find

Andhra Pradesh near Vishakhapatnam. It was the largest discovery of natural gas in world in
financial year 2002-2003. On 2 April 2009, Reliance Industries (RIL) commenced natural gas
production from its D-6 block in the Krishna-Godavari (KG)
The gas reserve is 7 trillion cubic feet in size. Equivalent to 1.2 billion barrels (165 mil in 2002,
Reliance found natural gas in the Krishna Godavari basin off the coast of lion tonnes) of crude
oil, but only 5 trillion cubic feet are extractable.
On 2008 Oct 8, Anil Ambani's Reliance Natural Resources took Reliance Industries to the Bombay High
Court to uphold a memorandum of understanding that said RIL will supply the natural gas at $2.34 per
million British thermal units to Anil Ambani.

Meaning of Financial Statement

Financial statements refer to such statements which contains financial information about
an enterprise. They report profitability and the financial position of the business at the end of
accounting period. The team financial statement includes at least two statements which the
accountant prepares at the end of an accounting period. The two statements are:

The Balance Sheet

Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet mirrors

the financial position on a particular date in terms of the structure of assets, liabilities and owners
equity, and so on and the Profit and Loss account shows the results of operations during a certain
period of time in terms of the revenues obtained and the cost incurred during the year. Thus the
financial statement provides a summarized view of financial position and operations of a firm

Meaning of Financial Analysis

The first task of financial analysis is to select the information relevant to the decision
under consideration to the total information contained in the financial statement. The second step

is to arrange the information in a way to highlight significant relationship. The final step is
interpretation and drawing of inference and conclusions. Financial statement is the process of
selection, relation and evaluation.

Features of Financial Analysis

To present a complex data contained in the financial statement in simple and

understandable form.
To classify the items contained in the financial statement inconvenient and rational
groups.

To

make

comparison

between

various

groups

to

conclusions.

Purpose of Analysis of financial statements

To know the earning capacity or profitability.

To know the solvency.
To know the financial strengths.
To know the capability of payment of interest & dividends.
To make comparative study with other firms.
To know the trend of business.
To know the efficiency of mgt.
To provide useful information to mgt

draw

various

Procedure of Financial Statement Analysis

The following procedure is adopted for the analysis and interpretation of financial

statements:The analyst should acquaint himself with principles and postulated of accounting. He
should know the plans and policies of the managements that he may be able to find out

whether these plans are properly executed or not.

The extent of analysis should be determined so that the sphere of work may be decided.
If the aim is find out. Earning capacity of the enterprise then analysis of income statement
will be undertaken. On the other hand, if financial position is to be studied then balance

sheet analysis will be necessary.

The financial data be given in statement should be recognized and rearranged. It will
involve the grouping similar data under same heads. Breaking down of individual
components of statement according to nature. The data is reduced to a standard form. A
relationship is established among financial statements with the help of tools & techniques

of analysis such as ratios, trends, common size, fund flow etc.

The information is interpreted in a simple and understandable way. The significance and

utility of financial data is explained for help indecision making.

The conclusions drawn from interpretation are presented to the management in the form
of reports.

Tools of Financial Statement Analysis

Various tools are used to evaluate the significance of financial statement data. Three commonly
used tools are these:

Ratio Analysis

Funds Flow Analysis

Cash Flow Analysis

Ratio Analysis:

Fundamental Analysis has a very broad scope. One aspect looks at the general
(qualitative) factors of a company. The other side considers tangible and measurable
factors (quantitative). This means crunching and analyzing numbers from the financial
statements. If used in conjunction with other methods, quantitative analysis can produce
excellent results.

Ratio analysis isn't just comparing different numbers from the balance sheet, income
statement, and cash flow statement. It's comparing the number against previous years,
other companies, the industry, or even the economy in general. Ratios look at the
relationships between individual values and relate them to how a company has performed
in the past, and might perform in the future.

Fund Flow Analysis:

Fund may be interpreted in various ways as
(a) Cash,
(b) Total current assets,
(c) Net working capital,
(d) Net current assets.
For the purpose of fund flow statement the term means net working capital. The flow of
fund will occur in a business, when a transaction results in a change i.e., increase or decrease in
the amount of fund.
According to Robert Anthony the funds flow statement describes the sources from which
additional funds were derived and the uses to which these funds were put.
In short, it is a technical device designed to highlight the changes in the financial
condition of a business enterprise between two balance sheets.
Different names of Fund-Flow Statement

A Funds Statement
A statement of sources and uses of fund
A statement of sources and application of fund
Where got and where gone statement
Inflow and outflow of fund statement

Cash Flow Statement:

Cash is a life blood of business. It is an important tool of cash planning and control. A
firm receives cash from various sources like sales, debtors, sale of assets investments etc.
Likewise, the firm needs cash to make payment to salaries, rent dividend, interest etc.

Cash flow statement reveals that inflow and outflow of cash during a particular period. It
is prepared on the basis of historical data showing the inflow and outflow of cash.

Reliance Industries Balance Sheet

Reliance Industries Balance Sheets from 2012 to 2015

in Rs. Cr.

Total Share Capital

Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Net worth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total Current Assets, Loans &

Mar '12
Mar '13
12 months 12 months
Sources Of Funds
1,393.17
1,393.21
1,393.17
1,393.21
0.00
60.14
0.00
0.00
43,760.90
59,861.81
4,650.19
2,651.97
49,804.26
63,967.13
7,664.90
9,569.12
14,200.71
18,256.61
21,865.61
27,825.73

Mar '14
12 months

Mar '15
12 months

1,453.39
1,453.39
1,682.40
0.00
77,441.55
871.26
81,448.60
6,600.17
29,879.51
36,479.68

1,573.53
1,573.53
69.25
0.00
112,945.44
11,784.75
126,372.97
10,697.92
63,206.56
73,904.48

71,669.87
91,792.86
Application Of Funds
84,970.13
99,532.77
29,253.38
35,872.31
55,716.75
63,660.46
6,957.79
7,528.13
5,846.18
16,251.34
10,119.82
12,136.51
4,163.62
3,732.42
239.31
308.35
14,522.75
16,177.28
8,266.55
12,506.71
1,906.85
1,527.00

117,928.28

200,277.45

104,229.10
42,345.47
61,883.63
23,005.84
20,516.11
14,247.54
6,227.58
217.79
20,692.91
18,441.20
5,609.75

149,628.70
49,285.64
100,343.06
69,043.83
20,268.18
14,836.72
4,571.38
500.13
19,908.23
13,375.15
23,014.71

Advances
Differed Credit
Current Liabilities
Provisions
Total Current Liabilities &

24,696.15
0.00
17,656.02
3,890.98

30,210.99
0.00
24,145.19
1,712.87

44,743.86
0.00
29,228.54
2,992.62

56,298.09
0.00
42,664.81
3,010.90

Provisions
Net Current Assets
Miscellaneous Expenses
Total Assets
Contingent Liabilities
Book Value (Rs)

21,547.00
3,149.15
0.00
71,669.87
24,897.66
324.03

25,858.06
4,352.93
0.00
91,792.86
46,767.18
439.57

32,221.16
12,522.70
0.00
117,928.28
37,157.61
542.74

45,675.71
10,622.38
0.00
200,277.45
36,432.69
727.66

Reliance Industries Profit and Loss Account

Reliance Industries Profit & Loss Accounts from 2012 to 2015

Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Exp.
Selling and Admin Exp.
Miscellaneous Expenses
Preoperative Exp.
Capitalised
Total Expenses
Operating Profit
PBDIT
Interest
PBDT
Depreciation
Other Written Off
Profit Before Tax
Extra-ordinary items
Tax
Reported Net Profit
Total Value Addition
Preference Dividend
Equity Dividend
Corporate Dividend Tax
Shares in issue (lakh)
Earnings Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)

in Rs. Cr.
Mar '12
Mar '13
12 months
12 months
Income
89,124.46
118,353.71
8,246.67
6,654.68
80,877.79
111,699.03
546.96
236.89
2,131.19
654.60
83,555.94
112,590.52
Expenditure
59,739.29
80,791.65
1,146.26
2,261.69
978.45
2,094.09
668.31
1,112.17
5,872.33
5,478.10
300.74
321.23

Mar '14
12 months

Mar '15
12 months

139,269.46
5,463.68
133,805.78
6,595.66
-1,867.16
138,534.28

146,328.07
4,369.07
141,959.00
1,264.03
427.56
143,650.59

98,832.14
2,052.84
2,119.33
715.19
5,549.40
412.66

109,284.34
3,355.98
2,397.50
1,162.98
4,736.60
562.42

-155.14

-111.21

-175.46

-3,265.65

68,550.24

91,947.72

109,506.10

118,234.17

4,847.14
0.00
23,018.14
48.10
23,066.24
3,559.85
19,458.29
4,847.14
23,018.14
48.10
10,673.96
0.00
1,631.24
277.23

5,195.29
0.00
18,446.66
0.00
18,446.66
3,137.34
15,309.32
5,195.29
18,446.66
0.00
8,949.83
0.00
1,897.05
322.40

14,536.49
133.86
130.00
542.74

15,737.98
97.28
130.00
727.66

3,400.91
4,815.15
0.00
0.00
10,711.18
14,528.75
0.88
0.51
10,712.06
14,529.26
1,642.72
2,585.35
9,069.34
11,943.40
3,400.91
4,815.15
10,711.18
14,528.75
0.88
0.51
8,810.95
11,156.07
0.00
0.00
1,393.51
1,440.44
195.44
202.02
Per share data (annualized)
13,935.08
13,935.08
65.08
85.71
100.00
110.00
324.03
439.57

Suggestion & Recommendation

1. Liquidity refers to the ability of the concern to meet its current obligations as and when these
become due. The company should improve its liquidity position.
2. The company should make the balance between liquidity and solvency position of the
company.
3. The profit ratio is decreased in current year so the company should pay attention to this
because profit making is the prime objective o every business.
4. The cost of goods sold is high in every year so the company should do efforts to control it.
5. The long term financial position of the company is very good but it should pay a little attention
to short term solvency of the company.

Conclusion

The companys overall position is at a very good position. 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 the last year shows the maximum liquidity.

Bibliography

ANAUAL REPORTS OF RELIANCE INDUSTRIES LIMITED

2011-2012
2012-2013
2013-2014
2014-2015

Website:
www.ril.com
www.wikipedia.com