Indian Institute of Foreign Trade

FINANCIAL ANALYSIS OF
RELIANCE INDUSTRIES

Maaniya Sachdeva (Roll. No. 16A)

Manik Singh (Roll No. 17A)
Nandisha Ahuja (Roll No. 19A)
Sidhant Gupta (Roll No. 32A)
 Table Of Content
 Company Profile
 Business Model
 Significant Recent Development
 Statement Of Profit and Loss
 Statement Of Balance Sheet
 Statement of Cash Flow
 Analysis And Interpretation
 Dividend Policy
 Key Accounting Concept (Along With RIL policy)
 #Afunfact
Company Profile

Reliance is one of the most

prominent businesses in India, the
biggest "traded on an open market"
organization in India by showcase
capitalization, and the biggest
organization in India as estimated by
income after it outperformed Indian
Oil Corporation sometime back.
Reliance
The Reliance
Industries
group,has
founded
its entities
by Dhirubhai
across domains
H Ambani,
like vitality,
is India’s
petrochemicals,
largest privatematerials,
sector enterprise,
common with
assets, retail,
businesses in the energy
and broadcast communications.and material value chain. The organization is positioned 155th on the
Fortune Global 500 rundown of the world's greatest enterprises.

BUSINESS MODEL

Business Model of Reliance Industries – Product Offerings

A business model is a company that is the blueprint of its core operations strategy in order to earn
profit. Models typically include information such as the items or services that the company intends to
sell, target markets, and any expected costs. Let’s dissect the business model of Reliance Industries in
detail by understanding their product offerings.

A product could be a service, object, or innovation that a company sells. With about 94 subsidiaries,
Reliance Industries Limited offers a variety of products in different sectors and under different brands.
Let us first take a look at the product offerings.
 Some of the categories of products are listed below:

 Refining and Marketing

 Refining

 Petroleum Retail

 Petrochemicals

 Polymers

 Chemicals

 Polyester & Fibre Intermediates

 Oil and Gas Exploration and Production

 Retail

 Textiles

 Media and Entertainment

 TV Channels

 Filmed Entertainment

 Content Asset Monetization

 Digital Content

 Digital Commerce

 Publishing Business

 Allied Business

Business Model of Reliance Industries – Target Audience

With a vast range of items available throughout its retail outlets and services ranging from telecom to
gas stations, Reliance Industries as a brand caters to the demands of a diversified range of consumer
categories.
The company uses a combination of demographic, geographic, and psychographic segmentation
characteristics including occupation, gender, age, economic class, behavior, and geography, among
others.
To reach its target market, the brand uses a differentiated, targeted, and aggressive pricing strategy.
After understanding the target audiences of Reliance Industries, let us take a closer at their market
share.

Business Model of Reliance Industries – Market Share

Reliance Industries Limited is India’s largest retailer and mass-market leader. It has about 6.44 billion
shares in the market of which approximately 49% is owned by the Ambani family and the remaining are
owned by the public shareholders.
In the year 2019-2020, Reliance has seen a 5.4% increase in consolidated revenue from consumer
business. It has seen a huge increase in the number of subscribers and consequently higher revenue
generated especially in the digital sector.
With this, the target audience of Reliance Industries gets conclude. If you want to learn the marketing
strategy of Reliance, read IIDE’s Reliance Marketing Strategy.
Another important aspect of a business model is competitor analysis. Let us understand the business
model of Reliance Industries in contrast with its competitors. 

Significant Recent DEVELOPMENT

Pricing of US$4 Billion of Senior Unsecured Notes across 10, 30 and 40 years tranches

First ever jumbo US$ Notes issuance from India Mumbai, 6 th January 2022: Reliance Industries Limited (“RIL”
or the “Company”) announced that on January 5, 2022, it has priced a Rule 144A / Regulation S multi-tranche
offering aggregating US$4 billion comprising of: 1. US$ 1,500,000,000 2.875% Senior Unsecured Notes due
2032 2. US$ 1,750,000,000 3.625% Senior Unsecured Notes due 2052 3. US$ 750,000,000 3.750% Senior
Unsecured Notes due 2062 (together the “Notes”). The Notes are rated BBB+ by S&P and Baa2 by Moody’s.
The Notes were nearly 3 times oversubscribed with a peak order book aggregating ~US$11.5 billion and were
priced through RIL’s secondary curve. The Notes have been priced at 120 basis points, 160 basis points and 170
basis points over the respective US Treasuries benchmark. RIL has joined a select group of issuers from Asia to
have made jumbo bond issuances. This transaction is significant on various counts: 1. largest ever foreign
currency bond issuance from India 2. Tightest ever implied credit spread over the respective US Treasury across
each of the 3 tranches by an Indian Corporate 3. Lowest coupon achieved for benchmark 30-year and 40-year
issuances by a private sector BBB corporate from Asia ex-Japan 4. First ever 40-year tranche by a BBB private
sector corporate from Asia ex Japan Interest on the Notes will be payable semi-annually in arrears and the Notes
shall rank pari passu with all other unsecured and unsubordinated obligations of RIL. The bond proceeds will be
primarily used for refinancing of existing borrowings. The Notes received orders from over 200 accounts in Asia,
Europe and the United States. In terms of geographic distribution, the Notes were distributed: 53% in Asia, 14%
in Europe and 33% in the United States. The Notes were distributed to high quality fixed income accounts: 69%
to fund managers, 24% to insurance companies, 5% to banks and 2% to public institutions. SrikVenkatachari,
Joint Chief Financial Officer of RIL, commented, “We are extremely pleased with the strong outcome on our
multi-tranche long dated USD bond issuance, having issued not only the largest debt capital market transaction
at US$4 billion but also the tightest credit spreads across each of the long-dated tenors for any corporate in
India.” “The support received from the marquee international capital market investors is reflective of the strength
of our underlying businesses with established growth platforms across energy, consumer and technology as well
as robustness of our balance sheet. This issue continues the tradition of Reliance being a sophisticated and
innovative issuer across the capital structure.” BoFA Securities, Citigroup, and HSBC acted as Joint Global
Coordinators. BofA Securities, Citigroup, HSBC, Barclays, JP Morgan and MUFG acted as Joint Active Book
runners. ANZ, BNP PARIBAS, Credit Agricola CIB, DBS Bank Ltd., Mizuho Securities, SMBC Nikko, Standard
Chartered Bank and State Bank of India, London Branch acted as Joint Passive Book runners.

Reliance Industries signs MoU for investment of Rs 5.95 lakh crore in Green Energy & other projects in Gujarat
Will create 10 lakh employment opportunities in the State

Ahmedabad, January 13, 2022: Reliance Industries Limited (RIL) signed MoU today with the Government of
Gujarat for a total investment of Rs 5.955 lakh crore as part of Investment Promotion Activity for Vibrant Gujarat
Summit 2022. These projects will create 10 lakh direct / indirect employment opportunities in the State. To make
Gujarat net zero and carbon free, RIL proposes to invest Rs 5 lakh crore in the State over the span of 10 to 15
years to set up 100 GW Renewable Energy Power Plant and Green Hydrogen Eco-System development. RIL will
develop an eco-system for assisting Small and Medium Enterprises (SMEs) and encourage entrepreneurs to
embrace new technologies and innovations leading to captive use of Renewable Energy and Green Hydrogen.
RIL’s initiatives for decarbonisation and creating a green ecosystem emanate from the vision of Hon'ble Prime
Minister Shri Narendra Modi. In consultation with Government of Gujarat, RIL has started the process of scouting
land for 100 GW renewable energy power project in Kutch, Banaskantha and Dholera. The company has
requested for 4.5 lakh acres of land in Kutch. RIL will invest another Rs 60,000 crore in setting up New Energy
Manufacturing-Integrated Renewable Manufacturing: 1) Solar PV Module (manufacture of Polysilicon, wafer, cell
& module); 2) Electrolyzer; 3) Energy-storage Battery; 4) Fuel Cells. Further Rs 25,000 crore investments will be
made by RIL in existing projects and new ventures over next 3 to 5 years. RIL has also proposed to invest Rs
7,500 crore over 3 to 5 years for Jio Network upgradation to 5G and another Rs 3,000 crore over 5 years in
Reliance Retail.
 Statement of Profit and Loss

(` in crore)

Notes 2020-21 2019-20

Income
Value of Sales 2,76,181 3,62,869

Income from Services 2,759 3,308

Value of Sales & Services (Revenue) 2,78,940 3,66,177

Less: GST Recovered 13,871 14,322

Revenue from Operations 25 2,65,069 3,51,855

Other Income 26 14,818 13,566
Total Income 2,79,887 3,65,421
Expenses

Cost of Material Consumed 1,68,262 2,37,342

Purchase of Stock-in-Trade 7,301 7,292

Changes in Inventories of Finished Goods, Work-in- 27 610 77

Progress and Stock-in-Trade

Excise Duty 19,402 14,902

Employee Benefits Expense 28 5,024 6,067

Finance Costs 29 16,211 12,105

Depreciation/Amortisation and Depletion Expense 1 9,199 9,728

Other Expenses 30 30,970 33,347

Total Expenses 2,56,979 3,20,860

Profit Before Exceptional Item and Tax 22,908 44,561

Exceptional Item (Net of Tax) 31 4,304 (4,245)

Profit Before Tax* 27,212 40,316

Tax Expenses*
Current Tax 11 - 7,200
Deferred Tax 18 (4,732) 2,213

Profit for the Year 31,944 30,903

Other Comprehensive Income

i. Items that will not be reclassified to Profit or Loss 26.1 350 (392)

ii. Income tax relating to items that will not be reclassified to (79) (944)
Profit or Loss

iii. Items that will be reclassified to Profit or Loss 26.2 2,755 (6,921)
iv. Income tax relating to items that will be reclassified to (456) 1,183
Profit or Loss
Total Other Comprehensive Income/(Loss) for the Year (Net of 2,570 (7,074)
Tax)
Total Comprehensive Income for the Year 34,514 23,829

Earnings Per Equity Share of Face Value of ` 10

each

Basic (in `) – After Exceptional Item 32 49.6 48.42

6

Basic (in `) – Before Exceptional Item 32 42.9 55.07

7

Diluted (in `) – After Exceptional Item 32 48.9 48.42

0

Diluted (in `) – Before Exceptional Item 32 42.3 55.07

1
Balance Sheet
As at 31st March, 2021

(` in crore)
As As
Notes at 31st at 31st
March, March,
 2021 2020
Assets
Non-Current Assets

Property, Plant and Equipment 1 2,92,092 2,97,854

Capital Work-in-Progress 1 20,765 15,638
Intangible Assets 1 14,741 8,624
Intangible Assets Under Development 1 12,070 12,327
Financial Assets
Investments 2 2,52,620 4,21,793
Loans 3 65,698 44,348
Other Non-Current Assets 4 4,968 4,461
Total Non-Current Assets 6,62,954 8,05,045

Current Assets

Inventories 5 37,437 38,802

Financial Assets
Investments 6 94,665 70,030
Trade Receivables 7 4,159 7,483
Cash and Cash Equivalents 8 5,573 8,485
Loans 9 993 15,028
Other Financial Assets 10 59,560 16,115
Other Current Assets 12 8,332 10,711
Total Current Assets 2,10,719 1,66,654

Total Assets 8,73,673 9,71,699

Equity and Liabilities

Equity

Equity Share capital 13 6,445 6,339

Other Equity 14 4,68,038 3,84,876
Total Equity 4,74,483 3,91,215
Liabilities

Non-Current Liabilities

Financial Liabilities

Borrowings 15 1,60,598 1,94,402

Other Financial Liabilities 16 4,014 2,930
Provisions 17 1,499 1,410
Deferred Tax Liabilities (Net) 18 30,788 50,556
Other Non-Current Liabilities 19 504 504
Total Non-Current Liabilities 1,97,403 2,49,802
Current Liabilities
Financial Liabilities 33,152 59,899
Borrowings
20 90 116
Trade Payables Due to:
21 86,909 70,932
Micro and Small Enterprises
61,172 1,32,492
Other than Micro and Small 19,563 66,170
Enterprises Other Financial
Liabilities 901 1,073
22
2,01,787 3,30,682
Other Current 23
Liabilities Provisions 3,99,190 5,80,484
24
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities 8,73,673 9,71,699
Cash Flow Statement

For the year ended 31st March, 2021

(` in crore)

2020-21 2019-20

A. Cash Flow from Operating Activities

Net Profit Before Tax as per Statement of

27,212 40,316
Profit and Loss (After Exceptional item and
Tax thereon)

Adjusted for:
 Premium on Buy back of Debentures 194 60

Provision for Impairment in value of investment (Net) (16) -

(Profit) / Loss on Sale / Discard of Property, Plant & - 192

Equipment (Net)

Depreciation / Amortisation and Depletion Expense 9,199 9,728

Effect of Exchange Rate Change (1,238) (253)

Net Gain on Financial Assets # (2,866) (1,717)

Exceptional Item / Tax on exceptional item (4,304) (899)

Dividend Income (141) (350)

Interest Income # (11,065) (9,926)

Finance costs 16,211 12,105

Operating Profit before Working Capital Changes 33,186 49,256

Adjusted for:

Trade and Other Receivables 2,781 5,050

Inventories 1,365 5,342

Trade and Other Payables (36,154) 23,139
Cash Generated from Operations 1,178 82,787
Taxes Paid (Net) (1,690) (5,254)
Net Cash Flow (Used in)/from Operating Activities * (512) 77,533

B. Cash Flow from Investing Activities

Purchase of Property, Plant and Equipment and Intangible (21,755) (23,183)

Assets
Consideration for / (Repayment of) Capex Liabilities transferred
(27,743) 31,849
from Reliance Jio Infocomm Limited (RJIL) through Scheme of
Arrangement

Proceeds from disposal of Property, Plant and Equipment and 1,147 15

Intangible Assets

Investments in Subsidiaries/Trusts (16,147) (2,12,106)

Disposal of Investments in Subsidiaries 1,33,647 65,365

Purchase of Other Investments (4,32,492) (9,86,656)

Proceeds from Sale of Financial Assets (including Advance 4,34,074 10,02,471

Received)

Net Cash Flow for Other Financial Assets (7,321) (24,620)

Interest Income 10,706 2,890

 Dividend Income from Subsidiaries/Associates 141 303
Dividend Income from Others - 47
Net Cash Flow from/(Used in) Investing Activities 74,257 (1,43,625)

C. Cash Flow from Financing Activities

Proceeds from Issue of Equity Share Capital 5 18

Share Application Money - 1

Net Proceeds from Rights Issue 13,210 -

Payment of Lease Liabilities (53) (97)

Proceeds from Borrowings – Non–Current 32,765 87,310

Repayment of Borrowings – Non–Current (86,291) (9,238)

Borrowings–Current (Net) (18,078) 11,828

Dividends Paid (including Dividend Distribution Tax) (3,921) (4,584)

Interest Paid (14,294) (14,471)
Net Cash Flow (Used in)/from Investing Activities (76,657) 70,767

Net (Decrease)/Increase in Cash and Cash Equivalents (2,912) 4,675

Opening Balance of Cash and Cash Equivalents 8,485 3,768

Add: On Merger (Refer Note 41.1) - 42

Closing Balance of Cash and Cash Equivalents (Refer Note 5,573 8,485
No. 8)
Analysis and interpretation ratio analysis Liquidity Ratios

1. CURRENT RATIO FORMULA= CURRENT ASSET/CURRENT LIABILITIES

YEAR CURRENT CURRENT CURRENT

ASSETS LIABILITIES
RATIO
(in Rs.Cr.) (in Rs.Cr.)
(in times)

2015-2016 67372 125180 0.54

2016-2017 66977 157130 0.43

2017-2018 91856 206043 0.45

2018-2019 129317 213228 0.61

2019-2020 166654 330682 0.50

2020-2021 210719 201787 1.04

Interpretation:
The above table depicts the current ratio of Reliance Industries Limited. Current ratio is ratio that
measures the ability of the company to pay off the short term liabilities.. Current ratio is a ratio that
compared current assets and current liabilities. It is calculated by dividing current assets by current
liabilities. Current assets are those assets which are expected to be sold within the same financial
year or within one operating cycle. Current assets include cash and cash equivalents, accounts
receivable, inventory, prepaid liabilities, marketable securities and other liquid assets. Current
liabilities are those debts and obligations of a company that are expected to be dealt with within the
one year. Current liabilities include accounts payable, short term loans, accrued expenses and notes
payable. In the above table and chart, current ratio has been calculated for the past six financial
years. Thus, from the above table it is clear that the current ratio of Reliance Industries ranges
minimum of 0.43 during the year 2016-2017 and maximum of 1.04 during the year 2020-2021. An
ideal current ratio is 2:1, which means that the company must have2 times more current assets than
the current liabilities to covers its debts. The current ratio below 1 means that the company is not
efficient and doesn't have enough liquid assets to cover its short-term liabilities. Here, in none of the
above years except the CY currents assets are more than the current liabilities. Hence, in order to
achieve ideal current ratio the company must have tried and improved current assets in previous
years so that it has a better financial position in CY as compared to past years.

2. QUICK RATIO FORMULA= LIQUID ASSET/CURRENT LIABILITIES

 YEAR LIQUIDASSETS CURRENTLI QUICK RATIO
(InRs. Cr.) ABILITIES
(intimes)
(In Rs.Cr.)
2015-2016 10387 125180 0.08
2016-2017 7226 157130 0.05
2017-2018 13191 206043 0.06
2018-2019 15878 213228 0.07
2019-2020 127852 330682 0.38
2020-2021 173282 201787 0.85

Interpretation:
The above table depicts the quick ratio of Reliance Industries Limited. Quick ratio is another liquidity
ratio that measures how a company meets its short term obligations with its most liquid assets. It is
also called as acid test ratio. Quick ratio is calculated by dividing liquid assets by current liabilities.
Liquid assets are those assets which are converted into cash easily and quickly. Liquid assets
include cash in hand, cash at bank, cash equivalents, accrued income, promissory notes, etc. Liquid
assets are calculated by current assets minus inventory and prepaid expenses. Current liabilities are
those debts and obligations of a company that are expected to be dealt with within a year. Current
liabilities include accounts payable, short term loans, accrued expenses and notes payable. In the
above table quick ratio has been calculated for the past six financial years, i.e., from 2015-2016 to
2020-2021. Wherein, 2020-2021 has maximum of 0.85 proportion. Ratio of 1:1 is held to be the ideal
quick ratio indicating that the company has enough liquid assets to pay off its current obligations.
But it is clear that in none of the above years liquid assets and current liabilities are in 1:1 ratio.
Hence the company is inefficient to pay off its current liabilities from its immediate liquid assets. RIL
has to work on its liquid assets to achieve ideal quick ratio.

3. NET PROFABILITY RATIO= NET PROFIT/NET SALES*100

 YEARS NETPROFIT NETSALES NET
PROFITRA
(InRsCr.) (inRsCr.)
TIO(%)

2015-2016 27417 233158 11.75

2016-2017 31425 242025 12.98

2017-2018 33612 290042 11.58

2018-2019 35163 371616 9.46

2019-2020 30903 351855 8.78
2020-2021 31944 265069 12.05

Interpretation
The above table shows the net profit ratio of reliance industries limited. Net profit ratio illustrates
how much of revenue generated is in the form of profit. The ratio is expressed in terms of
percentage. It is key factor that indicates the financial status of the company.
Net profit is arrived by deducting all non-operating expenses from the operating profit made by the
company. The analysis is for the period of six years I .e 2015-2016 to 2020- 2021. The net profit ratio
for the year 2015-2016 is11.75% even though the net profit and sales for the respective year is at its
least when compared to all other financial years. In the year 2016- 2017, the net profit ratio is 12.98%
(second highest being for CY i.e. 12.05) which is the highest of all. The net profit ratios for the years
2017-2018 and 2018- 2019 are 11.58% and 9.46% respectively. The year with the highest sales and net
profit is 2018-2019 but it didn’t achieve the highest net profit ratio. In the year 2019-2020 the net profit
ratio is 8.78% which is the least ratio .From the above analysis, we understand that as the sales
increases, the net profit ratio tends to decrease and increase when the net profit increases. The ideal
net profit ratio is 25%. But the company failed to achieve it in any of the six years. In order to raise its
net profit ratio to the idea ratio, the company must try to increase its net profits.

4. RETURN ON EQUITY=NET INCOME/NET WORTH*100

 YEARS NET INCOME NET WORTH RETURN
ONEQUITY(
(inRsCr.) (inRsCr.)
%)

2015-2016 27417 240184 11.41

2016-2017 31425 288313 10.89

2017-2018 33612 314647 10.68

2018-2019 35163 405322 8.67

2019-2020 30903 391215 7.89
2020-2021 31944 474483 6.73

Interpretation:
The above table shows the return on equity ratio of reliance industries limited. It is the ratio that measures how
much of profits can be earned with the available equity. The ratio is expressed in terms of percentage. Net worth
is arrived by subtracting the debt from the total assets of the company. The study is for a period of six years i.e
2015-2016 to 2020-2021. The return on equity for the year 2015-2016 is 11.41% which is the highest ratio in
these six years. Though the net income and net worth is low, the company is able to achieve the maximum ratio.
yet the ratios keep on decreasing. The ratio for the year 2017-2018 is 10.68% and for the year 2018-2019 is
8.67%. with the highest net income. It is very clear from the analysis that as the net income and net worth keeps
on increasing, the return on equity ratio keeps on falling, lowest being for CY – 6.73%.
5. RETURN ON CAPITAL EMPLOYED FORMULA =

Return on Capital Employed= Earning before interest and Tax (EBIT)/Capital Employed

YEARS EARNINGSBEF CAPITALE RETURN

OREINTEREST MPLOYED ONCAPITALEMP
AND (InRs. Cr.) LOYED
TAX(InRs. Cr.) RATIO(in%)

2015-2016 38155 332540 11.47

2016-2017 43500 389616 11.16

2017-2018 50381 411482 12.24

2018-2019 57118 562517 10.15

2019-2020 44561 641017 6.95
2020-2021 22908 671886 3.40

Interpretation:
The above table depicts the return on capital employed ratio of Reliance Industries Limited. Return
on capital employed (ROCE) is a ratio that measures the company's profit- earning ability and capital
efficiency. This ratio helps in assessing how much profit can be earned out of the capital. It is
calculated by dividing earnings before interest and tax (EBIT) by capital employed. Earnings before
interest and taxes (EBIT) indicate the company's profit earning capacity. EBIT includes all incomes
and expenses except for interest and income tax. Capital employed is the total capital used for the
acquiring profits by the company. Capital employed is derived by subtracting current liabilities from
total assets. In the above table, return on capital employed ratio is calculated for the past six
financial years, i.e., from 2015- 2016 to 2020-2021. Above table it is clear that the return on capital
employed ratio of Reliance Industries ranges second last minimum of 6.95% during the year 2019-
2020 and maximum of 12.24% during the year 2017-2018. A good ROCE varies around 10%.Hence,
return on capital employed is completely satisfactory during the financial year 2018-2019; whereas it
is partially satisfactory during the financial years 2015-2016 and 2016-2017; while ROCE is not
satisfactory during the financial years 2017-2018 and 2019-2020. So the company has to concentrate
on its earnings to gain better return on capital employed. However, CY dropped to the least as much
as to 3.4
6. RETURN ON ASSET FORMULA= RETURN ON ASSET=PROFIT AFTER TAX (PAT)/TOTAL ASSET

YEAR PROFIT TOTALASSET RETURN

S (InRs.Cr.) ONASSE
AFTERTAX T
(InRs.Cr.)
(in%)
2015-2016 27417 457720 5.98

2016-2017 31425 546746 5.74

2017-2018 33612 617525 5.44

2018-2019 35163 775745 4.53

2019-2020 30903 971699 3.18

2020-2021 31944 873673 3.65

Interpretation
The above table depicts the return on assets ratio of Reliance Industry Limited. Return on asset
indicate show well a company is generating profits from its total assets. It can be calculated by
dividing the profit after tax by total assets of the company. Profit after tax is the amount arrived after
deducting tax and interest from the earnings of the company. The return on asset is indicated in
terms of percentage. In the above table the return on asset is calculated for the past six financial
years, i.e., from 2015-2016 to 2020-2021. From the above table it is clear that the return on assets
ratio of Reliance Industries ranges minimum of 3.18% during the year 2019- 2020 and maximum of
5.98% during the year 2015-2016. Return on assets over 5% are said to be good. Hence, the return on
assets is completely satisfactory during the financial years 2015- 2016, 2016-2017 and 2017-2018.
The company has to improve its total assets to achieve an ideal ratio of 5% on the financial years
2018-2019, 2019- 2020 and 2020-2021

7. WORKING CAPITAL TURNOVER RATIO= NET SALES/WORKING CAPITAL

YEARS NETSALES WORKING WORKING

CAPITAL CAPITALT
(inRsCr.) URNOVER
( inRsCr.)
RATIO( intimes)

2015-2016 233158 (57808) (4.03)

 2016-2017 242025 (90153) (2.68)

2017-2018 290042 (114187) (2.54)

2018-2019 371616 (83911) (4.43)

2019-2020 351855 (164028) (2.14)
2020-2021 265069 8932 29.67

Interpretation
The above table shows the working capital turnover ratio of Reliance industries limited. Working
capital turnover is a ratio shows how efficiently the working capital is utilized and how it helps in
sales and growth. A higher working capital turnover ratio indicates higher amount of sales. The ratio
is expressed in times. The working capital ratio can be calculated by dividing the net sales by
working capital of the company. The working capital turnover ratio is (2.68) for the year 2016 to 2017
which is better than the previous year. For the year 2017 to 2018 the working capital ratio is (2.54). In
the financial year 2018 to 2019 the working capital is (4.43) which is the least of all the given years.
The working capital turnover ratio for the year 2020 to 2021 is 29.67 which is the best of all. The
working capital turnover ratio for the company in all the six years shows a negative impact except
CY. This is mainly because the current assets of the company are not sufficient to meet all the
current liabilities incurred. The company must invest much more on current assets to bring the
working capital of the company positive rate.
DIVIDEND DISTRIBUTION POLICY

The Board of Directors (the “Board”) of Reliance Industries Limited (the “Company”) at its meeting
held on April 24, 2017 had adopted this Dividend Distribution Policy (the “Policy”) as required by
Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the
“Listing Regulations”).

OBJECTIVES

The objective of this Policy is to establish the parameters to be considered by the Board of Directors
of the Company before declaring or recommending dividend.

The Company has had an uninterrupted dividend payout since listing. In future, the Company would
endeavour to pay sustainable dividend keeping in view the Company’s policy of meeting the long-term
growth objectives from internal cash accruals.

The Board of Directors of the Company, while declaring or recommending dividend shall ensure
compliance with statutory requirements under applicable laws including the provisions of the
Companies Act, 2013 and Listing Regulations. The Board of Directors, while determining the dividend
to be declared or recommended, shall take into consideration the advice of the executive management
of the Company and the planned and further investments for growth apart from other parameters set
out in this Policy.

CIRCUMSTANCES IN WHICH THE SHAREHOLDER MAY OR MAY NOT EXPECT DIVIDEND

The Board of Directors of the Company may not declare or recommend dividend for a particular period
if it is of the view that it would be prudent to conserve capital for the then ongoing or planned
business expansion or other factors which may be considered by the Board.
PARAMETERS TO BE CONSIDERED BEFORE RECOMMENDING DIVIDEND

The Board of Directors of the Company shall consider the following financial / internal parameters
while declaring or recommending dividend to shareholders:

 Profits earned during the financial year

 Retained Earnings

 Earnings outlook for next three to five years

 Expected future capital / liquidity requirements

 Any other relevant factors and material events.

The Board of Directors of the Company shall consider the following external parameters while declaring
or recommending dividend to shareholders:

 Macro-economic environment – Significant changes in Macroeconomic environment materially affecting

the businesses in which the Company is engaged in the geographies in which the Company operates

 Regulatory changes – Introduction of new regulatory requirements or material changes in existing taxation
or regulatory requirements, which significantly affect the businesses in which the Company is engaged

 Technological changes which necessitate significant new investments in any of the businesses in which
the Company is engaged.

UTILIZATION OF RETAINED EARNINGS

The Company shall endeavour to utilise the retained earnings in a manner which shall be beneficial to
the interests of the Company and also its shareholders.

The Company may utilise the retained earnings for making investments for future growth and expansion plans,
for the purpose of generating higher returns for the shareholders or for any other specific purpose, as approved
by the Board of Directors of the Company
PARAMATERS THAT SHALL BE ADOPTED WITH REGARDS TO VARIOUS CLASSES OF SHARE

The Company has issued only one class of shares viz. equity shares. Parameters for dividend payments in respect of any
other class of shares will be as per the respective terms of issue and in accordance with the applicable regulations and
will be determined, if and when the Company decides to issue other classes of shares.

CONFLICT IN POLICY

In the event of any conflict between this Policy and the provisions contained in the Listing Regulations, the Regulations
shall prevail.

AMENDMENTS

The Board may, from time to time, make amendments to this Policy to the extent required due to change in
applicable laws and Listing Regulations or as deemed fit on a review
Following explained are the Key Accounting Principles that would be referred in section below:

1. Separate Entity: The separate entity concept states that we should always separately record the
transactions of a business and its owners.

2. Accounting Period: Accounting period concept is based on the theory that all accounting transactions of
a business should be divided into equal time periods, which are referred to as accounting periods.

3. Money Measurement: The money measurement concept states that a business should only record
an accounting transaction if it can be expressed in terms of money.

4. Going Concern Concept: Going concern concept is one of the accounting principles that states that a
business entity will continue running its operations in the foreseeable future and will not be liquidated or
forced to discontinue operations for any reason.

5. Cost Concept: The cost concept of accounting states that all acquisitions of items (e.g., assets or
items needed for expending) should be recorded and retained in books at cost.

6. Conservatism or Prudence: Accounting conservatism is a set of bookkeeping guidelines that call for a
high degree of verification before a company can make a legal claim to any profit.

7. Materiality: In accounting, materiality refers to the impact of an omission or misstatement of

information in a company's financial statements on the user of those statements.

8. Consistency: The consistency principle states that, once you adopt an accounting principle or
method, continue to follow it consistently in future accounting periods

9. Matching: Matching concept states that expenses that are incurred in an accounting period should be
matching with the revenue earned during that period

10. Accrual Basis: The accrual basis of accounting is the concept of recording revenues when earned
and expenses as incurred.

11. Dual Aspect: Dual aspect accounting is a concept that suggests double entry of every business
transaction while preparing a financial or accounting report

12. Substance over form: Substance over form is the concept that the financial statements and
accompanying disclosures of a business should reflect the underlying realities of accounting
transactions .

Significant Accounting Policies of Reliance Industries Ltd. (Based on annual report)

1) Basis of Preparation and Presentation

The Financial Statements have been prepared on the historical cost basis except for following assets and
liabilities which have been measured at fair value amount:
 1

i) Certain Financial Assets and Liabilities (including derivative instruments),

ii) Defined Benefit Plans - Plan Assets and
iii) Equity settled Share Based Payments

The Financial Statements of the Company have been prepared to comply with the Indian Accounting standards
(''Ind AS''), including the rules notified under the relevant provisions of the Companies Act, 2013, amended from
time to time. The Company''s Financial Statements are presented in Indian Rupees (''), which is also its
functional currency and all values are rounded to the nearest crore (''00,00,000), except when otherwise
indicated..

2) Summary of Significant Accounting Policies

(a) Current and Non-Current Classification

The Company presents assets and liabilities in the Balance Sheet based on Current/ Non Current classification.
An asset is treated as Current when it is –

- Expected to be realised or intended to be sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period, or

-Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.

The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

(b) Property, Plant and Equipment Property,

 2

Plant and Equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated
depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost
directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign
exchange contracts and adjustments arising from exchange rate variations attributable to the assets. In case of
land the Company has availed fair value as deemed cost on the date of transition to Ind AS. benefits associated
with the item will flow to the entity and the cost can be measured reliably.

Property, Plant and Equipment which are significant to the total cost of that item of Property, Plant and
Equipment and having different useful life are accounted separately.

Other Indirect Expenses incurred relating to project, net of income earned during the project development stage
prior to its intended use, are considered as pre-operative expenses and disclosed under Capital Work-in-
Progress. Depreciation on Property, Plant and Equipment is provided using written down value method on
depreciable amount except in case of certain assets of Oil to Chemicals segment which are depreciated using
straight line method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to
the Companies Act, 2013 except in respect of the following assets, where useful life is different than those
prescribed in Schedule II.

Particular Depreciation

Fixed Bed Catalyst (useful life: 2 years or more) Over its useful life as technically assessed 100%
depreciated in the year of addition Over its useful life
Fixed Bed Catalyst (useful life: up to 2 years) as technically assessed

Plant and Machinery (useful life: 25 to 50 years)

The residual values, useful lives and methods of depreciation of Property, Plant and Equipment are reviewed at
each financial year end and adjusted prospectively, if appropriate.

Gains or losses arising from derecognition of a Property, Plant and Equipment are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of
Profit and Loss when the asset is derecognised.

(c) Leases

The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing arrangements, if
the contract conveys the right to control the use of an identified asset.
 3

The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset
and the Company has substantially all of the economic benefits from use of the asset and has right to direct the
use of the identified asset. The cost of the right-of-use asset shall comprise of the amount of the initial
measurement of the lease liability adjusted for any lease payments made at or before the commencement date
plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any
accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the
lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement
date over the shorter of lease term or useful life of right-of-use asset.

The Company measures the lease liability at the present value of the lease payments that are not paid at the
commencement date of the lease. The lease payments are discounted using the interest rate implicit in the
lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses
incremental borrowing rate. For short-term and low value leases, the Company recognises the lease payments
as an operating expense on a straight-line basis over the lease term.

(d) Intangible Assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less
accumulated amortisation/depletion and impairment losses, if any. Such cost includes purchase price, borrowing
costs, and any cost directly attributable to bringing the asset to its working condition for the intended use, net
charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the
Intangible Assets. Subsequent costs are included in the asset''s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to
the entity and the cost can be measured reliably.

Other Indirect Expenses incurred relating to project, net of income earned during the project development stage
prior to its intended use, are considered as pre-operative expenses and disclosed under Intangible Assets
Under Development.

Gains or losses arising from derecognition of an Intangible Asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and
Loss when the asset is derecognised. The Company''s intangible assets comprises assets with finite useful life
which are amortised on a straight-line basis over the period of their expected useful life.

(e) Research and Development Expenditure

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss as and when
incurred.

Development costs are capitalised as an intangible asset if it can be demonstrated that the project is expected
to generate future economic benefits, it is probable that those future economic benefits will flow to the entity and
the costs of the asset can be measured reliably, else it is charged to the Statement of Profit and Loss.
 4

(f) Cash and Cash Equivalents

Cash and cash equivalents comprise of cash on hand, cash at banks, short-term deposits and short-term, highly
liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.

(g) Finance Costs

Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are
regarded as an adjustment to the interest cost. Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assets are capitalised 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.

Interest income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are
charged to the Statement of Profit and Loss for the period for which they are incurred.

(h) Inventories

Items of inventories are measured at lower of cost and net realisable value after providing for obsolescence, if
any, except in case of by-products which are valued at net realisable value. Cost of inventories comprises of
cost of purchase, cost of conversion and other costs including manufacturing overheads net of recoverable
taxes incurred in bringing them to their respective present location and condition.

Cost of finished goods, work-in-progress, raw materials, chemicals, stores and spares, packing materials,
trading and other products are determined on weighted average basis.

(i) Impairment of Non-Financial Assets - Property, Plant and Equipment and Intangible Assets

The Company assesses at each reporting date as to whether there is any indication that any Property, Plant and
Equipment and Intangible Assets or group of Assets, called Cash Generating Units (CGU) may be impaired. If
any such indication exists, the recoverable amount of an asset or CGU is estimated to determine the extent of
impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the CGU to which the asset belongs.

An impairment loss is recognised in the Statement of Profit and Loss to the extent, asset''s carrying amount
exceeds its recoverable amount. The recoverable amount is higher of an asset''s fair value less cost of disposal
and value in use. Value in use is based on the estimated future cash flows, discounted to their present value
using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific
to the assets.

The impairment loss recognised in prior accounting period is reversed if there has been a change in the
estimate of recoverable amount.
 5

(j) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of
money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time
is recognised as a finance cost.

Provision for Decommissioning Liability

The Company records a provision for decommissioning costs towards site restoration activity. Decommissioning
costs are provided at the present value of future expenditure using a current pre-tax rate expected to be incurred
to fulfil decommissioning obligations and are recognised as part of the cost of the underlying assets. Any change
in the present value of the expenditure, other than unwinding of discount on the provision, is reflected as
adjustment to the provision and the corresponding asset. The change in the provision due to the unwinding of
discount is recognised in the Statement of Profit and Loss.
 6

FUN FACT:

RIL becomes net debt free after raising Rs 1.68 lakh crore:
Mukesh Ambani