[Submitted for the Degree of B.Com.

(Honours) in
Accounting & Finance under University of Calcutta]

Title of the Project

(B. Com. Semester-VI)

Submitted by

Name of Student: ANANNA GAYEN

C. U. Registration No.: 141-1212-0251-21

C.U. Roll No.: 211141-11-0170

Supervised by

Name of the Supervisor: Prof. Baidik Sadhukhan

Name of the College: Acharya Girish Chandra Bose Collage

 STUDENT’S DECLARATION

I hereby declare that the Project work with the title “WORKING
CAPITAL MANAGEMENT ON RELIANCE INDUSTRIES LTD.”
submitted by me for the partial fulfillment of the degree of B.Com. (Honours) in
Accounting & Finance under the University of Calcutta is my original work and has
not been submitted earlier to any other University / Institution for the fulfillment of
the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part

has been incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has been duly
acknowledge providing details of such literature in the references.

Signature:

Place: KOLKATA Name: ANANNA GAYEN

Date: Address: Naungi daulatpur phoolbagan

south 24 PGS. Kolkata 700139

C.U. Regn. No.: 141-1212-0251-21

C.U Roll No.: 211141-11-0170

College Roll No.: 1 7 0

 SUPERVISOR’S CERTIFICATE

This is to certify that ANANNA GAYEN, a student of B.Com. (Honours) in

Accounting & Finance of Acharya Girish Chandra Bose Collage under
the University of Calcutta has worked under my supervision and guidance for her
Project Work and prepared a Project Report with the title “WORKING CAPITAL
MANAGEMENTON RELIANCE INDUSTRIES LTD.”

The project report, which she is submitting, is her genuine and original work to the
best of my knowledge.

Signature:

Place: KOLKATA Name: Prof. Baidik Sadhukhan

Date: Designation: Faculty of Commerce

Name of the college: Acharya Girish

Chandra Bose Collage
 ACKNOWLEDGEMENT

I convey my heartfelt appreciation to Prof. Baidik Sadhukhan without whose

cordial and active supervision the project could not have come into light. I also
extend my thanks to all other Professors of Commerce of my college for their
commendable efforts to bring out this project in a very short span of time.

Again I am thankful to Prof. Baidik Sadhukhan for reposing confidence on me to

write on this dynamic subject and share her vast knowledge for the completion of this
project.

Moreover, I am also thankful to all other learned members of my college for valuable
suggestions regarding the project.

My sincere thanks to DR. ASIT KUMAR SARKAR, Principal of Acharya

Girish Chandra Bose Collage, for giving me this opportunity to carry out
this project.

Date:

(Signature of the student)

 TABLE OF CONTENTS

CHAPTERS TITLE PAGE NO.

1 INTRODUCTION
1.1 BACKGROUND OF THE STUDY 07
1.2 REVIEW OF LITERATURE 07 – 08
1.3 OBJECTIVE OF THE STUDY 09
1.4 RESEARCH METHODOLOGY 10
2 CONCEPTUAL FRAMEWORK
2.1 INTRODUCTION OF WORKING CAPITAL 12 – 13
2.2 CONCEPTS OF WORKING CAPITAL 13 – 18
2.3 IMPORTANCE OF WORKING CAPITAL 18 – 21
2.4 COMPANY PROFILE 21
2.5 NATIONAL SCENARIO 22 – 24
3 PRESENTATION OF DATA, ANALYSIS
& FINDINGS
3.1 PRESENTATION OF DATA
3.1 ( A ) BALANCE SHEET 26 – 27
3.1 ( B ) PROFIT & LOSS ACCOUNT 28
3.2 ANALYSIS
3.2 ( A ) WORKING CAPITAL LEVEL 29
& ANALYSIS
3.2 ( B ) ROLE OF RATIO ANALYSIS 30
3.2 ( C ) CLASSIFICATION OF 31 – 44
WORKING CAPITAL RATIO
3.3 FINDINGS 45
4 RECOMMENDATION
&
CONCLUSION
4.1 RECOMMENDATION 47
4.2 LIMITATIONS OF THE STUDY 48
4.3 CONCLUSION 49
BIBLIOGRAPHY 50
 INTRODUCTION

1.1 BACKGROUND OF THE STUDY:

In this project we have studies the performance of Working Capital Management of

Reliance Industries Ltd. We find that performance of Working Capital may be measured from two
view point, such as - (i) Measurement of efficiency of overall management and (ii) Measurement of
efficiency of management of each component of working capital.

For that, we have prepared different ratios and analysis them to check how
efficiently working capital has been used in the business.

1.2 REVIEW OF LITERATURE:

The purpose of this chapter is to present a review of literature relating to the

working capital mangement. The following are the literature review by different authors and
different research scholars.

Pass C.L., Pike R.H1 (1984), studied that over the past 40 years major theoretical developments
have occurred in the areas of long term investments and financial decisions making. Many of these
new concepts and the related techniques are now being employed successfully in industrial practise.
By construct for less attention has been paid to the area of short term finance, in particular that of
working capital management. Such neglect might be acceptable were working capital
considerations of relatively little importance to the firm, but effective working capital management
has a crucial role to play in enhancing the profitability and growth of the firm. Indeed, experience
shows that inadequate planning and control of working capital is one of the more comment causes
of business failure.

Pg -- 07
Herzfeld B2 (1990), studied that “Cash is king”…so say the money managers who share the
responsibility of running this country’s business and with banks demanding more from their
prospective borrowers, greater emphasis has been placed on those accountable for so-called
working capital management. Working capital management refers to the management of current
assts and short term assets and short term liabilities. In essence, the purpose of that function is to
make certain that the company has enough assets to operate its business. Here are things you should
know about working capital management.

Dulay R (2008) says that “The working capital in a firm generally arises out of four basic factors
like sale volume, technological changes, seasonal, cyclical changes and policies of the firm.”

Hard castle J (2009) says that, “Working capital, sometimes called Gross Working Capital”.

Thachappilly G (2009) says that, “Working capital management manages flows of fund”.

E.W Walker (1964) suggested this theory of working capital management. According to this
theory, working capital is determine on management’s attitude towards risk and factors that
influence the amount of cash, receivables, inventories and other current assets required to support a
given volume of output. Here risk means risk of not maintaining sufficient current assets to (I) meet
all the maturing financial obligations and (ii) support the proper sales level.

Walker’s four principles are:

1. If working capital is varied relatives to sales, the amount of risk that a firm
assumes is also varied and the opportunity for gain or loss is increased i.e., if
the level of working capital is decreased, the amount of risk is increased and
the opportunity for gain or loss is increased.On the other hand if the level of
working capital is increased the amount of risk is decreased and the
opportunity for gain or loss is also decreased.

2. Capital should be invested in each component of working capital as long as

the equity position of the firm increases.

3. The type of capital used to finance working capital directly effects the
amount of risk that a firm assumes as well as the opportunity for gain or loss
and cost of capital.

4. The greater the disparity between the maturities of a firm’s short-term debt
instrument and its flow of internally generated funds, the greater the risk and
vice-versa.

Pg -- 08
1.3 OBJECTIVE OF THE STUDY:

Working capital of the firms is a very important aspect of the company and show it
needs to be managed properly. If the working capital is not managed properly then the company
can not increase its turnover and also cannot earn profit and for this reason the study of woking
capital is very important. There are various objectives of the study which can be follows:

 To study the working capital of the company.

 To study the optimum level of current asset and current liabilities of the company.

 To study the working capital components like receivable accounts,cash management

inventory position.

 To estimate the requirement of working capital.

 To study the liquidly position through various related working capital ratios.

 To known the performance and overall operational efficiency of the company.

 To provide various financial information of the company.

 To interpret the financial position of the company.

 To highlight the policies and produces of working capital analysis.

 To identify the vertical areas where the greater attention is needed for better
management.

 To get some experience of working in an organization.

 To know the deficiencies in the area of the finance.

Pg -- 09
1.4 RESEARCH METHODOLOGY:

Research methodology is a systemetic approach in methodology research

to achieve predefined objective. It helps a researcher to guide during the causes of research work,
rules and techniques started in research methodology save time and labour of the researcher as
know how to proceed to conduct the study as per the objective.

Types of data collection:

There are two types of data collection methods available –

 Primary data collection

 Secondary data collection.

Secondary sources:

 The project is based on secondary information collected through five years annual
report of the company, supported by various books and internet sides. The data
collection was aimed at study of working capital mangement of the company.
 The secondary data of the organization helped me a lot. I have collected all the
figures from the annual reports and financial managements of Reliance Industries
Ltd.
 Records of the company: this helped me to get details regarding the history of the
organization.
 Reliance Industries Ltd. Website: www.Reliance Industries Ltd.

Project is based on :

Annual report of Reliance Industries Ltd. 2017-2018, 2018-2019, 2019-2020,

2020-2021, 2021-2022.

Pg -- 10
 CONCEPTUAL FRAMEWORK

2.1 INTRODUCTION OF WORKING CAPITAL:

Working capital means the funds which are required to meet the
daily transection of the business. In other words it refers to that part of the firm’s capital which is
required for financing current assets such as cash, marketable securities,debtors and
inventories.Thus working capital is very significant facet of financial management. Every business
concern should have adequate working capital to run its operation smoothly. It should have neither
excess working capital nor inadequate working capital because both of these have adverse effects
on firm’s profitability and liquidity positions.Therefore, business concerns should maintain
adequate working capital. The basic objective of working capital is to manage the firm’s current
assets and current liabilities in such a way that a satisfactory level of working capital is maintained.

Working capital policies have a great effect on a firm’s liquidity

and profitability. Therefore, the working capital should be managed in a way which will ensure
higher profitability and proper liquidity of the concern. The significance of working capital
management is to ensure that the organization maintains a ‘good fit’ with the changing environment
and strives to build the capability to cope with challengers.

Working capital management is another important part of a

business management because insufficient working capital means insufficient liquidity which
always hampers daily business. The efficienet working management is very needful to achieve
profitability and to maintain liquidity for proper management of working capital.

In general senses ‘Working Capital” can be defined as the excess

current assets over current liabilities. It is moves from one process to another, from cash to
inventories and back to cash. The term circulating working capital is used to designate those assets
that are changed with relative rapidity from one to another i.e. from cash to inventories to
receivable to cash.

Pg -- 12
DEFINITION OF WORKING CAPITAL MANAGEMENT :

Working capital refers to the fund which is needs to support day-

to-day operations, such as purchase of raw materials, payment of wages and other expenses.
Working capital is not confined to any specific current assets as they constantly change their form
and circulates in the business constantly like the blood circulation in a living body.

The following most important definition of working capital:

1. Working capital is the difference between the inflow and outflow of funds. In other word it
is the net cash inflow.

2. Working capital represents the total of all current assets.in other words it is the “Gross
Working Capital”, it is also known as “Circulating Capital” or “Current Capital” for current
assets is rotating in their nature.

3. Working capital is defined as “The excess of current assets over current liabilities and
provisions”. In other words it is the “Net Currrent Assets or Net Working Capital”.

Net working capital = Total current assets(∑CA) – Total current liabilities (∑CL)

When ∑CA > ∑CL, it indicates positive working capital and when ∑CL > ∑CA, it represents
negetive working capital.

2.2 CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital:

 Balance sheet concept or traditional concept.

 Operating cycle concept.

Pg -- 13
  Balance Sheet Concept or Traditional Concept:
It shows the position of the firm at a certain point of time. It is calculated on the basis of balance
sheet prepared at a specific date. In this method there are two types of working capital.

 Gross Working Capital

 Net Working Capital

GROSS WORKING CAPITAL:

It refers to a firm’s investment in current assets. The sum of the current assets is
the working capital of the business. The sum of the current is quantitative aspect of working capital
which emphasizes more on quantity then on its quality, but it fails to reveal the true picture of the
financial position of the business because every increase in current liabilities will decrease the gross
capital.

NET WORKING CAPITAL:

It is difference between the current assets and current liabilities for the excess of
total current assets over total current liabilities. It can also be defined as that part of a firm’s current
asset which is financed with long term funds. It may be either negetive or positive. When the
current assets exceed the current liabilities, the working capital is positive and vice-versa.

 OPERATING CYCLE CONCEPT:

The duration or time required to complete the sequence of events right from the purchase of raw
materials for cash to the realization of sales in cash is called operating cycle or working capital
cycle. The operating cycle consists of three phases:

In phase 1, cash gets converted into inventory. This would include purchase
of raw materials, conversion of raw materials into work-in-progress, finished goods and terminate
in the transfer of goods to stock at the end of the manufacturing process. In the case of trading
organization, this phase would be shorter as there would no manufacturing activity and cash will be
converted into inventory directly. The phase will, of course, be totally absent in case of service
organizations.

Pg -- 14
 In phase 2 of the cycle, the inventory is converted into receivables as
credit sales are made to customers. Firms which do not sell on credit will obviously not have phase
2 of the operating cycle.

The last phase, phase 3, represents the stage when receivables are
collected. This phase completes the operating cycle. Thus, the firm has moved from cash to
inventory, to receivables and to cash again.

COMPONENTS OF WORKING CAPITAL:

The components of working capital are the constitunes that normally make up the figure
of working capital. So the components of working capital are current assets and current liabilities.

 Current Assets: current assets are those assets which are generally realized within a short
period of time, say, one year. Current assets comprise of the following:

 Stock and inventories: stock and inventories include the following :

I. Raw materials
II. Work-in-progess
III. Consumable stores and spares
IV. Finish goods

 Sundry debtors
 Bills receivable
 Short terms loans and advances
 Temporary or short-term investments in marketable securities
 Prepaid expenses
 Accrued income
 Cash at bank
 Cash in hand

Pg -- 15
 Current Liabilities: current liabilities are those liabilities which are payable within a
short period of time, say, one year. Current liabilities include the following:

 Sundry creditors
 Bills payable
 Short term loans, advances and deposits
 Outstanding expenses
 Unclaimed dividends
 Proposed dividends
 Provision for taxation
 Bank overdraft etc.

CLASSIFIC ATION OF WORKING CAPITAL

WORKING
CAPITAL

ACCORDING TO ACCORDING TO
BALANCE SHEET TIMIN G
CONCEPT CONCEPT

GROSS TEMPORARY PERMANENT

NET WORKING
WORKING WORKING WORKING
CAPITAL
CAPITAL CAPITAL CAPITAL

POSSITIVE SEASONAL
WORKING REGULAR
VARIABLE
CAPITAL WORKING
WORKING
CAPITAL
CAPITAL

SPECIAL RESERVE
NEGATIVE
VARIABLE MARGIN
WORKING
WORKING WORKING
CAPITAL
CAPITAL CAPITAL

Pg -- 16
 According to the balance sheet concept there are two types of working capital:

1. Gross Working Capital: The term “Gross working capital” refers to the firm’s investments
in current assets. This is a wider concept of working capital. Simply it may be said that the
summation of all current assets of a firm is called the Gross Working Capital.

Gross working capital = Total current assets

Or
Gross working capital = Shareholder’s funds + Long term debts + Current
liabilities – Fixed Assets

2. Net Working Capital: Net working capital is the difference of current assets and current
liabilities. This is the excess of current assets over current liabilities.

Net Working Capital = Total Current Assets – Total Current Liabilities

a) Positive Working Capital – This is a type of net working capital. If the total
current assets are more than total current liability then the different is said to
be positive working capital.

b) Negative Working Capital – This is another type of net working capital.

This situation occurs when current liabilities exceed total current assets. If
total current liabilities are more than total current assets then the different is
known as negative working capital.

3. Temporary or Variable Working Capital: This is the capital which is not permanent
temporary or variable working capital is the working capital which is required over and
above the permanent working capital.

a) Seasonal Variable Working Capital – Seasonal working capital is that

working capital which is required the meet seasonal demands of the
business. In peak seasons more raw materials are required to be purchased,
more expenses need to be incurred, more funds are locked up in debtors
balance, etc.

Pg -- 17
 b) Special Variable Working Capital – This is a part of the working capital
which is required to finance special operations such as extensive market
campaign, experiments with products or methods of production, carrying
out special jobs, etc.

4. Permanent or Hardcore or Fixed Working Capital: Permanent working capital is the

part of capital that is locked up in current assets to carry out business smoothly throughout
the years. This is the minimum level of working capital that is required to carry out the
minimum level of business activity.

a) Regular Working Capital – The minimum amount of liquid capital

required to keep up of the circulation of capital from cash to inventories,
receivables and again to cash is called regular working capital.

b) Reserve Margin or Cushion Working Capital – The excess of capital

over the needs of regular working capital which should be kept to meet
contingences is called reserve margin or cushion working capital. The
contingences include rising process, business depressions, strikes, natural
calamity, etc.

2.3 IMPORTANCE OF WORKING CAPITAL:

A firm should without adequate working capital something like human body with blood deficiency.
The need of working capital management stated as follows:

Regular in supply of raw materials: Raw materials are the primary factor of
production. For continuous production, a regular supply of raw materials is needed.
Working capital ensures a regular supply of raw materials and continuous production.

Regular payment of wages and salaries: Sound working capital position of the firm
ensures regular and timely payment of wages and salaries which in turn increases the
morale and efficiency of employees.

Pg -- 18
 Increase in efficiency and productivity: The regular flow of working capital enhances
productivity of labor and increases managerial efficiency.

High morale: Adequacy of working capital creates an environment of security,

confidence, high morale and overall efficient of labors. It also helps in the timely
payment of dues, if any to employees besides regular salaries and wages.

Smooth flow of production: To maintain the smooth flow of production working

capital is required. Without working capital this flow cannot continue.
Regular supply of merchandise: In case of trading concern working assures regular
supply of merchandise and a continuous process of sale.

Solvency: Adequate working capital helps in maintaining the solvency of the business.
Funds are available to make all the payments in time, as and when they are due.

Goodwill: A firm which maintains a sound working capital position can make
payments to its creditors in time which enhances its reputation or goodwill.

Easy loans: If the business has a good credit standing, trade reputation and adequate
working capital, they can get loan from banks or financial institutions on easy and
favorable.

Increase in profitability: Adequate amount of working capital and its proper

management helps in completing operating cycle quickly. If the rotation of operating
cycle increases profitability as well as profitability can be increases. It helps in the
process of growth of the business.

WORKING CAPITAL CYCLE OR OPERATING CAPITAL

CYCLE OR CASH CYCLE

Working capital cycle denotes the length of time between the firms’ paying cash for materials,
entering into work-in-progress, making finished goods, selling finished goods to the debtors and the
inflow of cash from debtors.

Pg -- 19
Working capital cycle consists of the following events:

I. Conversion of cash into raw materials, wages and overhead,

II. Conversion of raw materials into WIP,
III. Conversion of WIP into finished stock,
IV. Conversion of finished stock into debtors through sales and
V. Conversion of debtors into cash after the expiry of credit period.

Working capital cycle indicates the length of time or time gap between outflows of cash and
inflows of cash. The length of time or duration of working capital cycle for the purpose of
determining working capital requirement is equal to the sums of durations’ of raw materials, labor,
overhead, WIP and debtors less credit period allowed by creditors. Duration of working capital
cycle varies according to the nature of business. The task of finance manager is to shorten the
length of working capital cycle.

WORKING CAPITAL = R+W+F+D-C

CASH

DEBTORS CREDITORS

STOCK OF STOCK OF
FINISH RAW
GOODS MATERIALS

MATERIALS
ADDED WITH
LABOUR &
OVERHEAD

Pg -- 20
 BENEFITS OF WORKING CAPITAL CYCLE CONCEPT

 It helps to estimate the volume of working capital needed during the time gap between
outflows of cash and inflows of cash in the operating cycle.

 From the working capital cycle one can ascertain the amount of funds that remain blocked
in various items of current assats.

 It helps the finance manager in the working capital forecasting, working capital control and
working capital management.

 It indicates the total time lag and the reletive signification of its constituents.

 It includes the finance manager to take necessary action to shorten length of operating
cycle.

HISTORY OF “RELIANCE INDUSTRIES LTD.”

2.4 COMPANY PROFILE:

Reliance Industries Limited, privately owned conglomerate that operates

in petrochemical production and refining, textile, retail, marketing, telecommunications, and
other industries. It was the first privately owned Indian company to enter the Fortune 500.
Headquarters are in Mumbai.

Pg -- 21
2.5 NATIONAL SCENARIO:

R
eliance Commercial Corporation was set up in 1958 by Dhirubhai Ambani as a small
venture firm trading commodities, especially spices and polyester yarn. Pursuing a strategy
of backward integration and diversification, it opened its first textile mill in
Naroda, Gujarat state, and was incorporated in 1966 as Reliance Textiles and Engineers, Ltd. Over
the next decade its business focused on the textile industry even as it continued to expand.

1958–1980

Reliance Commercial Corporation was set up in 1958 by Dhirubhai Ambani as a small venture firm
trading commodities, especially spices and polyester yarn. In 1965, the partnership ended and
Dhirubhai continued the polyester business of the firm In 1966, Reliance Textile Industries Pvt.
Ltd. was incorporated in Maharashtra. It established a synthetic fabrics mill in the same year
at Naroda in Gujarat. On 8 May 1973, it became Reliance Industries Limited. In 1975, the company
expanded its business into textiles, with "Vimal" becoming its major brand in later years. The
company held its Initial public offering (IPO) in 1977. The issue was over-subscribed by seven
times. In 1979, a textiles company Sidhpur Mills was amalgamated with the company. In 1980, the
company expanded its polyester yarn business by setting up a Polyester Filament Yarn Plant in
Patalganga, Raigad, Maharashtra with financial and technical collaboration with E. I. du Pont de
Nemours & Co., U.S.

1981–2000

In 1985, the name of the company was changed from Reliance Textiles Industries Ltd. to Reliance
Industries Ltd. During 1985 to 1992, the company expanded its installed capacity for
producing polyester yarn by over 145,000 tonnes per annum.

Pg -- 22
The Hazira petrochemical plant was commissioned in 1991–92.

In 1993, Reliance turned to the overseas capital markets for funds through a global depository issue
of Reliance Petroleum. In 1996, it became the first private sector company in India to be rated by
international credit rating agencies. S&P rated Reliance "BB+, stable outlook, constrained by the
sovereign ceiling". Moody's rated "Baa3, Investment grade, constrained by the sovereign ceiling".

In 1995/96, the company entered the telecom industry through a joint venture with NYNEX,
USA, and promoted Reliance Telecom Private Limited in India.

In 1998/99, RIL introduced packaged LPG in 15 kg cylinders under the brand name Reliance Gas.

The years 1998–2000 saw the construction of the integrated petrochemical complex at
Jamnagar in Gujarat, the largest refinery in the world.

2001 onwards

In 2001, Reliance Industries Ltd. and Reliance Petroleum Ltd. became India's two largest
companies in terms of all major financial parameters. In 2001–02, Reliance Petroleum was merged
with Reliance Industries.

In 2002, Reliance announced India's biggest gas discovery (at the Krishna Godavari basin) in
nearly three decades and one of the largest gas discoveries in the world during 2002. The in-place
volume of natural gas was more than 7 trillion cubic feet, equivalent to about 120 crore (1.2 billion)
barrels of crude oil. This was the first-ever discovery by an Indian private sector company.

In 2002–03, RIL purchased a majority stake in Indian Petrochemicals Corporation Ltd. (IPCL),
India's second largest petrochemicals company, from the government of India, RIL took over
IPCL's Vadodara Plants and renamed it as Vadodara Manufacturing Division (VMD). IPCL's
Nagothane and Dahej manufacturing complexes came under RIL when IPCL was merged with RIL
in 2008.

Pg -- 23
In 2005 and 2006, the company reorganised its business by demerging its investments in power
generation and distribution, financial services and telecommunication services into four separate
entities. Reliance Industries reentered the telecommunications market through a subsidiary known
as Jio Platforms; in 2013 Mukesh and Anil agreed to share telecommunication networks in their
first major cooperative effort since 2005. After Reliance offered the first nationwide network for
4G broadband service, Jio became one of India’s leading brands in telecommunications and e-
commerce.

In 2006, Reliance entered the organised retail market in India with the launch of its retail store
format under the brand name of 'Reliance Fresh'. By the end of 2008, Reliance Retail had close to
600 stores across 57 cities in India.

In November 2009, Reliance Industries issued 1:1 bonus shares to its shareholders.

In 2010, Reliance entered the broadband services market with acquisition of Infotel Broadband
Services Limited, which was the only successful bidder for pan-India fourth-generation (4G)
spectrum auction held by the government of India.

In the same year, Reliance and BP announced a partnership in the oil and gas business. BP took a
30 per cent stake in 23 oil and gas production sharing contracts that Reliance operates in India,
including the KG-D6 block for $7.2 billion. Reliance also formed a 50:50 joint venture with BP for
sourcing and marketing of gas in India.

In 2017, RIL set up a joint venture with Russian Company Sibur for setting up a Butyl rubber plant
in Jamnagar, Gujarat, to be operational by 2018.

In August 2019, Reliance added Find primarily for its consumer businesses and mobile phone
services in the e-commerce space.

On the 18th of August 2021, Reliance Industries Limited (RIL) stated that it had shut down its
manufacturing units at Nagothane town in Maharashtra.

In December 2022, Reliance Industries Market cap stood at Rs.17, 59,017.23 crore.

Pg -- 24
 3.1 PRESENTATION OF DATA

RELIANCE INDUSTRIES LTD.

3.1(A) BALANCE SHEET AS ON 31ST MARCH

BALANCE SHEET OF MAR 22 MAR 21 MAR 20 MAR 19 MAR 18

RELIANCE INDUSTRIES (in
Rs. Cr.)
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND
LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 6,765.00 6,445.00 6,339.00 6,339.00 6,335.00

TOTAL SHARE CAPITAL 6,765.00 6,445.00 6,339.00 6,339.00 6,335.00

Reserves and Surplus 464,762.00 468,038.00 384,875.00 398,983.00 308,297.00
TOTAL RESERVES AND 464,762.00 468,038.00 384,875.00 398,983.00 308,297.00
SURPLUS

TOTAL SHAREHOLDERS 471,527.00 474,483.00 391,214.00 405,322.00 314,632.00

FUNDS
NON-CURRENT
LIABILITIES
Long Term Borrowings 167,231.00 160,598.00 194,402.00 118,098.00 81,596.00
Deferred Tax Liabilities [Net] 30,832.00 30,788.00 50,556.00 47,317.00 27,926.00
Other Long Term Liabilities 6,504.00 4,518.00 3,434.00 504.00 504.00
Long Term Provisions 1,598.00 1,499.00 1,410.00 2,483.00 2,205.00
TOTAL NON-CURRENT 206,165.00 197,403.00 249,802.00 168,402.00 112,231.00
LIABILITIES

CURRENT LIABILITIES
Short Term Borrowings 27,332.00 33,152.00 59,899.00 39,097.00 15,239.00
Trade Payables 134,005.00 86,999.00 71,048.00 88,241.00 88,675.00

Pg -- 26
Other Current Liabilities 38,749.00 80,735.00 198,662.00 73,900.00 85,815.00

Short Term Provisions 896.00 901.00 1,073.00 783.00 918.00

TOTAL CURRENT 200,982.00 201,787.00 330,682.00 202,021.00 190,647.00
LIABILITIES

TOTAL CAPITAL AND 878,674.00 873,673.00 971,699.00 775,745.00 617,525.00

LIABILITIES

ASSETS
NON-CURRENT ASSETS
Tangible Assets 223,824.00 292,092.00 297,854.00 194,895.00 191,879.00
Intangible Assets 15,802.00 14,741.00 8,624.00 8,293.00 9,085.00
Capital Work-In-Progress 19,267.00 20,765.00 15,638.00 105,155.00 92,581.00
Other Assets 0.00 0.00 0.00 0.00 0.00
FIXED ASSETS 274,288.00 339,668.00 334,443.00 314,745.00 300,447.00

Non-Current Investments 330,493.00 252,620.00 421,793.00 272,043.00 171,945.00

Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00
Long Term Loans And 41,951.00 65,698.00 44,348.00 31,806.00 17,699.00
Advances
Other Non-Current Assets 9,544.00 4,968.00 4,461.00 4,287.00 3,522.00
TOTAL NON-CURRENT 656,276.00 662,954.00 805,045.00 622,881.00 493,613.00
ASSETS
CURRENT ASSETS
Current Investments 78,304.00 94,665.00 70,030.00 59,640.00 53,277.00
Inventories 45,923.00 37,437.00 38,802.00 44,144.00 39,568.00
Trade Receivables 14,394.00 4,159.00 7,483.00 12,110.00 10,460.00
Cash And Cash Equivalents 21,714.00 5,573.00 8,485.00 3,768.00 2,731.00
Short Term Loans And 161.00 993.00 15,028.00 4,876.00 3,533.00
Advances
Other Current Assets 61,902.00 67,892.00 26,826.00 28,326.00 14,343.00
TOTAL CURRENT 222,398.00 210,719.00 166,654.00 152,864.00 123,912.00
ASSETS

TOTAL ASSETS 878,674.00 873,673.00 971,699.00 775,745.00 617,525.00

Pg -- 27
 RELIANCE INDUSTRIES LTD.
3.1(B) PROFIT & LOSS ACCOUNT
PROFIT & LOSS ACCOUNT MAR 22 MAR 21 MAR 20 MAR 19 MAR 18
OF RELIANCE INDUSTRIES
(in Rs. Cr.)
12 mths 12 mths 12 mths 12 mths 12 mths
INCOME
REVENUE FROM OPERATIONS 466,425.00 278,940.00 366,177.00 401,583.00 315,357.00
[GROSS]
Less: Excise/Service Tax/Other 42,722.00 33,273.00 29,224.00 29,967.00 25,315.00
Levies
REVENUE FROM OPERATIONS 423,703.00 245,667.00 336,953.00 371,616.00 290,042.00
[NET]
TOTAL OPERATING 423,703.00 245,667.00 336,953.00 371,616.00 290,042.00
REVENUES
Other Income 13,872.00 14,818.00 13,566.00 8,822.00 8,220.00
TOTAL REVENUE 437,575.00 260,485.00 350,519.00 380,438.00 298,262.00
EXPENSES
Cost Of Materials Consumed 320,852.00 168,262.00 237,342.00 265,288.00 198,029.00
Purchase Of Stock-In Trade 10,691.00 7,301.00 7,292.00 8,289.00 7,268.00
Operating And Direct Expenses 27,155.00 18,375.00 21,424.00 24,839.00 0.00
Changes In Inventories Of FG,WIP -7,962.00 610.00 77.00 -3,294.00 -3,232.00
And Stock-In Trade
Employee Benefit Expenses 5,426.00 5,024.00 6,067.00 5,834.00 4,740.00
Finance Costs 9,123.00 16,211.00 12,105.00 9,751.00 4,656.00
Depreciation And Amortization 10,276.00 9,199.00 9,728.00 10,558.00 9,580.00
Expenses
Other Expenses 15,951.00 13,565.00 14,306.00 14,252.00 31,496.00
TOTAL EXPENSES 390,789.00 237,577.00 305,958.00 333,071.00 252,537.00
PROFIT/ LOSS BEFORE 46,786.00 22,908.00 44,561.00 47,367.00 45,725.00
EXCEPTIONAL,
EXTRAORDINARY ITEMS AND
TAX
Exceptional Items 0.00 4,304.00 -4,245.00 0.00 0.00
PROFIT/LOSS BEFORE TAX 46,786.00 27,212.00 40,316.00 47,367.00 45,725.00
TAX EXPENSES-CONTINUED
OPERATIONS
Current Tax 787.00 0.00 7,200.00 9,440.00 8,953.00
Less: MAT Credit Entitlement 0.00 0.00 0.00 0.00 0.00
Deferred Tax 6,915.00 -4,732.00 2,213.00 2,764.00 3,160.00
Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00
TOTAL TAX EXPENSES 7,702.00 -4,732.00 9,413.00 12,204.00 12,113.00
PROFIT/LOSS AFTER TAX AND 39,084.00 31,944.00 30,903.00 35,163.00 33,612.00
BEFORE EXTRAORDINARY
ITEMS
PROFIT/LOSS FROM 39,084.00 31,944.00 30,903.00 35,163.00 33,612.00
CONTINUING OPERATIONS
PROFIT/LOSS FOR THE 39,084.00 31,944.00 30,903.00 35,163.00 33,612.00
PERIOD
Pg -- 28
 3.2 ANALYSIS

3.2(A) WORKING CAPITAL LEVEL AND ANALYSIS:

WORKING CAPITAL LEVEL:

The consideration of the level investment in current assets should avoid

two danger points excessive and inadequate investment in current assets. Investment in current
assets should be just adequate, not more or less, to the need of the business firms. Excessive
investment in current assets should be avoided because it impairs the firm’s profitability, as idle
investments earns nothing on the other hand inadequate amount of working capital can be
threatened solvency of the firms because of its inability to meet its current obligation. It should be
realized that the working capital need of the firms may be fluctuating with charging business
activity. This may cause excess or shortage of working capital frequently. The management should
be prompt to initiate and action and current imbalance.

WORKING CAPITAL TREND ANALYSIS

In working capital analysis the direction at changes over a period of time

is of crucial importance. Working capital is one of the important fields of managements. It is
therefore very essential for an analyst to make a study about the trend and direction of working
capital over a period of time. Such analysis enables as to study the upward and downward trend in
current assets and current liabilities and its effect on the working capital position.

Pg -- 29
3.2(B) ROLE OF RATIO ANALYSIS:

Ratio analysis is most widely used technique for interpreting and

comparing financial statements. A ratio is the relationship between one value and another. It is an
expression of a mathematical relationship between one quantity and another. The ratio of 200:100
is 2:1 or 2. Ratio analysis is the calculation of different ratio from a set of financial statements.
These ratios are used for comparison with either earlier years of similar business to provide
information and decision making.

Objective of ratio analysis:

To allow comparisons to be made which assist in predicting the future.

To investigate the reasons of the changes.

To construct a simple explanation of a complicated financial statement by its expression in

one figure.

To see what information users can get from the accounting system output.

Limitation of ratio analysis:

 By using ratios, forecasts of future of a business may not prove correct. This is
because ratios are all based on past happenings and not future probabilities. They are
subject to change in the future.

 Accounting ratio are simply clues. They do not indicate the causes of difference.
Therefore, they are not considered as basis for immediate conclusion.

 The technique of ratio analysis may prove inadequate in some situations if there is
differs in opinion regarding the interpretation of certain ratio.

Pg -- 30
 3.2(C) CLASSIFICATION OF WORKING CAPI TAL RATIO

CURRENT RATIO

LIQUIDITY RATIO

QUICK RATIO
WORKING
CAPITAL RATIO
INVENTORY
TURNOVER RATIO
EFFICIENCY RATIO
WORKING
CAPITAL
TURNOVER RATIO

Working capital ratio means ratios which are related with the working
capital management e.g. current assets, current liabilities, liquidity, profitability and risk turnoff etc.
these ratios are classified as follows….

Pg -- 31
 1. LIQUIDITY RATIO:

Current Ratio:

Current ratio is an indicator of the firm’s commitment to meet its short-term

liabilities or those due within one year. It tells investors and analysts how a company can
maximize the current assets on its balance sheet to satisfy its current debt and other
payables.

Current Ratio = Current Assets

Current Liabilities

Standard Ratio = 2:1

 Total Current Assets = (Current Investment + Inventories + Trade Receivables + Cash &
Cash Equivalent + Short Term Loans & Advances + Other Current Assets)

 Total Current Liabilities = (Short term borrowings + Trade Payables + Other Current
liabilities + Short Term Provisions)

YEAR Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

Current Assets (Rs. In Crore) (A) 222.39 210.72 166.65 152.86 123.91

Current Liabilities (Rs. In Crore) (B) 200.98 201.79 330.68 202.02 190.65

Current Ratio (A/B=C) 1.11 1.04 0.5 0.76 0.65

Pg -- 32
 Current Ratio

16%
27%

Mar-22

19% Mar-21

Mar-20

12% 26% Mar-19

Mar-18

Observation:-

Current Ratio indicates Company’s ability to payment short-term liability.

The Standard Current Ratio is 2:1. On the basis of company’s current ratio from March 2018 to
2022, we see it does not satisfy the ideal ratio (2:1). We also see it continuously decreasing from
2019 – 2022 compared to 2018. It indicates company is unable to pay its short-term liability & day
to day expenses in future.

Pg -- 33
Quick / Liquid / Acid –Test Ratio:

Quick Ratio establishes the relationship between quick or liquid assets

and liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon
without a loss of value. Cash is the most liquid asset. Other assets which are considered to be
relatively liquid and include in quick asset are debtors, bills receivable and marketable securities.
Inventories are considered as less liquid. Inventory normally required some time for realizing into
cash. Their value also is tendency to fluctuate. The quick ratio found by dividing quick assets is by
current liabilities.

Quick Ratio = Current assets - Inventories - Prepaid expenses

Current liabilities – Bank Overdraft

Standard Ratio = 1:1

(Rs. In Crore)
YEAR Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
Current Assets (A) 222,398.00 210,719.00 166,654.00 152,864.00 123,912.00

Inventories (B) 45,923.00 37,437.00 38,802.00 44,144.00 39,568.00

Prepaid Expenses (C) 0.00 0.00 0.00 0.00 0.00

Quick Asset ( A-B-C=D ) 176,475.00 173,282.00 127,852.00 108,720.00 84,344.00

Current Liabilities (E) 200,982.00 201,787.00 330,682.00 202,021.00 190,647.00

Bank Overdraft (F) 0.00 0.00 0.00 0.00 0.00

Quick Liabilities ( E-F=G ) 200982.00 201787.00 330682.00 202021.00 190647.00

Liquid Ratio ( H=D/G ) 0.88 0.86 0.39 0.54 0.44

Pg -- 34
 Liquid Ratio

14% 28%
Mar-22
17%
Mar-21
Mar-20
13% Mar-19
28%
Mar-18

Observation:-

Quick ratio indicates that the company has sufficient liquid balance for the payment of
current liabilities. The liquid ratio of 1:1 is supposed to be standard or ideal, but here the ratio is not
ideal.

2. EFFICIENCY RATIO:

The ratio compounded under this group indicates the efficiency of the
organization to use the various kinds of assets by converting them the form of sale. The ratio also
called as activity ratio or asset management ratio. As the asset basically categorized as fixed asset
and current assets and the current assets further classified according to individual components of
current assets viz. investment or receivables or debtors or as net current assets, the import ant of
efficiency ratios are as follows –

Pg -- 35
 Inventory Turnover Ratio:

Inventory turnover ratio indicates the efficiency of the firm in producing and
selling its products. It is calculated by dividing the cost of goods sold by average inventory.

Inventory Turnover Ratio = Cost of Goods Sold

Average Inventory

 Cost of Goods Sold = Revenue From Operations (Net) – Gross Profit

 Gross Profit = Revenue From Operations (Net) – Cost of Materials Consumed – Purchase of
Stock-in-Trade – Changes in Inventories of FG,WIP and Stock-in-trade

 Average Inventory = Opening Inventory + Closing Inventory

2

YEAR Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

Revenue From Operations [Net] (A) 423.70 245.66 336.95 371.62 290.04
Cost Of Materials Consumed (B) 320.85 168.26 237.34 265.29 198.02

Purchase Of Stock-In Trade (C) 10.69 7.30 7.29 8.29 7.26

(Rs. In crore)

Changes In Inventories Of FG,WIP And -7.90 0.6 1 -3.20 -3.20

Stock-In Trade (D)
Gross Profit (A-B-C-D=E) 100.06 69.50 91.32 101.24 87.96

Cost of Goods Sold ( A-E=F) 323.64 176.16 245.63 270.38 202.08

Opening Inventory (G) 37.43 38.80 44.14 39.57 34.02

Closing Inventory (H) 45.92 37.44 38.80 44.14 39.57

Average Inventory (G+H/2=I) 41.675 38.12 41.47 41.855 36.795

Inventory Turnover Ratio (Times) (F/I=J) 7.77 4.62 5.92 6.46 5.49

Pg -- 36
 Inventory Turnover Ratio

18% 26%

21%
15%

20%

Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

Observation:-

It was observed that inventory turnover ratio indicates maximum sales

achieved with the minimum investment in the inventory. As such, the general rule high inventory
ratio is desirable but high inventory turnover ratio may not necessary indicates the profitable
situation. An organization, in order to achieve a large scale volume may sometime sacrifice on
profit, inventory ratio may not result into high amount of profit. Inventory turnover ratio of
Reliance Industries Ltd. is fluctuating every year which indicates that inventory turnover is not
steady.

Pg -- 37
 Working Capital Turnover Ratio:

Working capital turnover is a ratio that measures how efficiently a company

is using its working capital to support sales and growth. Also known as net sales to working capital,
working capital turnover measures the relationship between the funds used to finance a company’s
operations and the revenues a company generates to continue operations and turn a profit.

A high turnover ratio shows that management is being very efficient in

using a company’s short-term assets and liabilities for supporting sales. In other words, it is
generating a higher dollar amount of sales for every dollar of working capital used.

In contrast, a low ratio may indicate that a business is investing in too many
accounts receivable and inventory to support its sales, which could lead to an excessive amount of
bad debts or obsolete inventory.

Working capital turnover ratio = Net Revenue from Operations

Working Capital

 Net Revenue from Operations = Gross Revenue from Operations – Excise / Service Tax /
Other Levies

 Working Capital = Total Current Assets – Total Current Liabilities

YEAR Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

Revenue From Operations [Net] (A) 423.70 245.66 336.95 371.62 290.04
Rs. In crore

Current Assets (B) 222.39 210.72 166.65 152.86 123.91

Current Liabilities (C) 200.98 201.79 330.68 202.02 190.65
Working Capital (B-C=D) 21.41 8.93 -164.03 -49.16 -66.74

Working Capital Turnover Ratio (A/D=E) 19.79 27.51 -2.05 -7.56 -4.35

Pg -- 38
 Working Capital Turnover Ratio

Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

Observation:-

From the above we can see that the amount of sales increase except in the year
of March 2021. But the working capital of the company was decreasing in a negative and it goes to
positive. We also see that the working capital turnover ratio decreasing trend in the year March
2019 compared to the year March 2018 and after that there is a decreasing trend and it goes to a
negative ratio in the March 2020 compared to the year March 2019 but in the next two years (i.e.,
March 2021 & March 2022) it increases.

Pg -- 39
 Debtors / Receivables Turnover Ratio:

Gross sales are inclusive of excise duty and scrap sales because both may
enter into receivables by credit sales. Average receivable calculate by opening plus closing balance
divided by 2. Increasing volume of receivables without a matching increase in sales is reflected by
a low receivable turnover ratio. It is an indication of slowing down of the collection system or an
extend line of credit being allowed by the customer organization. The latter may be due to the fact
the firm is losing out to competition. A credit manager engage in a task of granting credit or
monitoring receivable should take the hint from a falling receivable turnover ratio use this market
intelligence to find out the reason behind such failing trend.

Debtors / Receivables Turnover Ratio = Net Credit Sales

Average Trade Receivables

 It is assume that all sales are made on credit basis.

 Average Trade Receivables = Opening Trade Receivables + Closing Trade Receivables

2

(Rs. In Crore)
YEAR Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

Revenue From Operations [Net] (A) 423,703.00 245,667.00 336,953.00 371,616.00 290,042.00

Opening Trade Receivables (B) 4,159.00 7,483.00 12,110.00 10,460.00 5,472.00

Closing Trade Receivables (C) 14,394.00 4,159.00 7,483.00 12,110.00 10,460.00

Average Trade Receivables 9276.5 5821 9796.5 11285 7966

( B + C /2 = D )

Debtors / Receivables Turnover Ratio 45.67 42.20 34.40 32.93 36.41

(Times) (A/D=E)

Pg -- 40
 Debtors / Receivables Turnover Ratio

45.67 42.20
34.40 32.93 36.41

1 2 3 4 5

Debtors / Receivables Turnover Ratio (Times) (A/D=E)

Observation:-

Debtors Turnover Ratio indicates the number of times per year that the average balance of
debtors are collected. Here we see that the debtors / receivables turnover ratio of the company is a
decreasing trend in the year March 2019 compared to the March 2018 and after that a very low
decreasing trend in the year March 2020 compared to the year March 2019 and again it increased in
the next year and finally it again increasing trend it in the year March 2022 compared to the year
March 2021. It indicates company’s collection period from debtors is quite satisfying.

Creditors / Payables Turnover Ratio:

The Creditors Turnover Ratio also known as accounts payable turnover ratio
is a short-term liquidity measure used to quantify the rate at which a company pays of its suppliers.
Accounts payable turnover shows how many times a company pays off its accounts payable during
a period. Accounts payable are short-term debt that a company owes to its suppliers and creditors.
The accounts payable turnover ratio shows how efficient a company is at paying its suppliers and
short-term debts. A high creditor’s turnover ratio may indicate strict credit terms granted by the
suppliers. A low ratio may be an indication of liberal credit terms granted by the suppliers.

Pg -- 41
 Creditors / Payables Turnover Ratio = Net Credit Purchase
Average Trade Payables

 It is assumed that all purchase is made on credit basis.

 Average Trade Payables = Opening Trade Payables + Closing Trade Payables

2

YEAR Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

Purchase Of Stock-In Trade (A) 10.69 7.30 72.90 82.89 72.68
Rs. In Crore

Opening Trade Payables (B) 869.90 710.48 882.41 886.75 681.61

Closing Trade Payables (C) 1,340.05 869.90 710.48 882.41 886.75

Average Trade Payables (B+C/2=D) 1104.975 790.19 796.445 884.58 784.18

Creditors/Payables Turnover Ratio 0.10 0.09 0.09 0.09 0.09

(Times) (A/D=E)

Creditors/Payables Turnover Ratio

Creditors/Payables Turnover Ratio (Times) (A/D=E)

0.10
0.09
0.09 0.09
0.09

1 2 3 4 5

Pg -- 42
Observation:-

This ratio indicates the number of times per year that the average balance of creditors
is paid. Here we see that the Creditors Turnover Ratio of five consecutive years is very low (i.e.,
below 1). Not only that we also see that it was same quantity for the year March 2018 & March
2019 and after that it continuously increasing trend in every year. As the ratio is very low, so it
clear that liberal credit terms granted by the suppliers to the company.

Cash / Super Quick Ratio:

The cash ratio also known as Super Quick Ratio is a measurement of a

company’s liquidity, specifically the ratio of a company’s total cash and cash equivalents to its
current liabilities. The metric calculates a company’s ability to repay its short-term debt with cash
or near-cash resources, such as easily marketable securities. This information is useful to creditors
when they decide how much money, if any, they would be willing to loan a company. The cash
ratio is almost like an indicator of a firm’s value under the worst-case scenario – say, where the
company is about to go out of business. It tells creditors and analysts the value of current assets that
could quickly be turned into cash, and what percentage of the company’s current liabilities these
cash and near-cash assets could cover.

Cash / Super Quick Ratio = Cash & Cash Equivalent + Marketable Securities
Current Liabilities

Pg – 43
 YEAR Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
Cash & Cash Equivalent (A) 217.14 55.73 84.85 37.68 27.31
Rs. In crore

Marketable Securities (B) 0.00 0.00 0.00 0.00 0.00

Current Liabilities (C) 200.98 201.79 330.68 202.02 190.65

Cash/Super Quick Ratio (A+B/C=D) 1.08 0.28 0.26 0.19 0.14

Cash/Super Quick Ratio

Cash/Super Quick Ratio (A+B/C=D)

1.08

0.28 0.26
0.19 0.14

1 2 3 4 5

Observation:-

Higher the Super Quick / Cash Ratio better the liquidity condition of a business. In
the above case, for every 1 unit of current liability, the company has continuously increasing trend
in every year of super quick ratio, which is satisfying for the company.

Pg -- 44
 3.3 FINDINGS

Working Capital is the life line of every industry, irrespective of whether

it’s a manufacturing industry. Working Capital is the prime and most important requirement for
carrying out the day operations of the business. Working capital gives the much needed liquidity to
the business. Working capital finance reduces the overall fund requirement, required to build up the
current assets, which in turn help you improve your turnover ratio.

In this project we have studied “WORKING CAPITAL

MANAGEMENT ON RELIANCE INDUSTRIES LTD.”. During calculations, analysis and
making project report I came to some major finding that are as follows:

 Working capital shows a decreasing trend from the year March 2018 to March 2020 and
after that it gradually increased.

 Company lack current assets to meet its current liabilities as in all the five years the
company fails to meet the ideal standard ratio of 2:1.

 The quick ratio is just above the standard ratio which is 1:1.

 Cash did not help to increase in the sales volume, as cash is not earning asset.

 Working capital of the company is good enough to meet its current obligations.

 Inventory turnover ratio of Reliance Industries Ltd. is fluctuating every year which indicates
that inventory turnover is not steady.

 Company is generating better profit on net working capital employed every year.

Pg -- 45
 RECOMMENDATIONS

4.1 RECOMMENDATIONS:

Working Capital Management, there are mainly three parts they are Cash Management,
Receivables Management and Inventory Management. For optimum use of working capital, these
three parts should be managed properly, for that the recommendation are based purely on my
understanding of the situation. Some of the major things which I would like the authorities to
“RELIANCE INDUSTRIES LTD.” In order to maintain and improve on their performance to
take notice are as follows:

 Considering the cash management the company should maintain a cash flow budget every
year, considering monthly or quarterly. During the preparation of the cash budget the credit
period should be below 30 days allowed to the customer and company should hold enough
cash that it can meet its creditors any time.

 Company should take control on Debtor’s collection period which is major part of current
assets. Because we see that the average debt collection of the company is above than
normal period which is chance to bad debt. Prompt collection from debtors is better for the
concern so the financial position of the business is so so.

 The inventory turnover ratio for Reliance Industries Ltd. has been a success story for the
last year so the management should do everything possible thing to maintain this
inclination in the coming years and try to encourage its human resources to keep the good
work.

 The company has to take control on cash balance because cash is non earning asset.

Pg -- 47
 LIMITATIONS OF THE STUDY

4.2 LIMITATIONS OF THE STUDY:

The following limitations were encountered while preparing this project:

 This project has completed with annual reports, it just constitutes one part of data
collection i.e. secondary. There were limitations for primary data collection because
of confidentiality.

 This project is based on five years annual reports. Recommendation and conclusions
are based on such limited data. The trend of last five years may or may not reflect
the real working capital position of the company.

 Also it was difficult to collect the data regarding the competitors’ and their financial
information. Indusrty figures were also difficult to get.

 The topic working capital management is itself a very vast topic yet very important
also. Due to time restraints it was not possible to study in depth in get knowledge
what practises are followed at Reliance Industries Ltd.

 Since the financial matters are sensitive in nature the same could not acquired easily.

 Many facts and data are such that they are no to be disclosed because of the
confidential nature of the same.

 Since the study is based on historical data and information provided in the annual
report so it may not be used for future indicator.
 Fractional differences might be there in the calculated ratios.

 Other areas could not be focused due to lack of time.

Pg -- 48
 CONCLUSION

4.3 CONCLUSION:

In this project “WORKING CAPITAL MANAGEMENT ON

RELIANCE INDUSTRIES LTD.” which is one of the most important aspects of any
organization, as it deals in managing the entire current assets and current liabilities. After
analyzing the financial statement and having a in depth study of various ratio of the company
we conclude that the management of capital requires and evolution of cost and benefits
associated with each elements. Reliance Ltd. maintains sound position of working capital its
efficiency in receivables when we considered the company’s current ratio, quick ratio, debtors
turnover ratio, creditors turnover ratio, cash ratio, inventory turnover ratio, working capital
turnover ratio, they are not showing good situation of the company but the company make
profile rigorously and they make profile by using their working capital in a tricky way, but this
procedure are not followed by all kind of company. The company has primarily be non cash
loan from the market and reaping full benefits of its brand name. The company makes full
utilization of its fund before making payments to outsiders. We know that the Reliance
Industries Ltd. Company is a biggest company and they have a very well goodwill, also we
know that this company is day by day increasing all over the world. So finally, we can easily
conclude that working capital management has a great effect on the profitability of the company
and the managers create value for the shareholders by decreasing receivables accounts and
inventory and the managers must look for the method that by means of the correct management
is effective on the profitability of the companies.

Pg -- 49
 BIBLIOGRAPHY

SL. NO. NAME OF BOOKS AUTHOR

1 Financial Management Bhadra & Satpati

2 Financial Management Mr. Sushil Mukherjee

3 Financial Management Sukrata Kar & Nimai Bagchi

4 Financial Management M.Y Khan & P.K. Jain

5 Financial Management Ravi. M. Kishore

6 Financial Management Debashis Majumdar, Dr. SK. Raju Ali &

Lutfun Nesha

 Websites reference:

 www.google.com

 www.moneycontrol.com

 www.relianceindustriesltd.in

 www.wikipedia.com

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