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Directors Report of Reliance Industries Ltd.

Mar 31, 2016

Dear Members,

The Directors are pleased to present the Forty-second Annual Report and the Company''s audited financial statement for the financial year ended March 31, 2016.

FINANCIAL RESULTS

The Company''s financial performance, for the year ended March 31, 2016 is summarised below:

2015-16 2014-15 Rs. crore US$ million* Rs. crore US$ million*

PROFIT BEFORE TAX 35,701 5,389 29,468 4,715

Less: Current Tax 7,802 1,178 6,124 980

Deferred Tax 482 73 625 100

PROFIT FOR THE YEAR 27,417 4,138 22,719 3,635

Add: Balance in Profit and Loss Account 10,168 2,108 9,326 1,973

SUB-TOTAL 37,585 6,246 32,045 5,608

LESS: APPROPRIATION

Adjustment relating to Fixed Assets - - 318 51

Transferred to General Reserve 22,000 3,321 18,000 2,880

Dividend on Equity Shares **3,095 467 2,944 471

Tax on dividend ***605 91 615 98

CLOSING BALANCE 11,885 2,367 10,168 2,108

* 1 US$ = Rs. 66.25 Exchange Rate as on March 31, 2016 (1 US$ = Rs. 62.50 as on March 31, 2015)

** Interim dividend

*** Net of reversal of excess provision of dividend distribution tax of previous year of Rs. 17 crore

RESULTS OF OPERATIONS AND THE STATE OF COMPANY''S AFFAIRS

The highlights of the Company''s performance for the year ended March 31, 2016 are as under:

- Revenue from operations decreased by 26.3% to Rs. 2,51,241 crore (US$37.9 billion).

- Exports decreased by 35.8% to Rs. 1,46,855 crore (US$22.2 billion).

- PBDIT increased by 18.3% to Rs. 47, 721 crore (US$7.2 billion).

- Profit before Tax increased by 21.2% to Rs. 35,701 crore (US$5.4 billion).

- Cash Profit increased by 17.7% to Rs. 37,465 crore (US$5.7 billion).

- Net Profit increased by 20.7% to Rs. 27,417 crore (US$4.1 billion).

- Gross Refining Margin stood at US$10.8 / bbl for the year ended March 31, 2016.

The consolidated revenue from operations of the Company for year ended March 31, 2016 was down by 23.8% to Rs. 2,96,091 crore (US$44.7 billion). The decline in turnover reflects sharp fall in feedstock and product prices during the year. Strong operating performance from the refining and petrochemicals business led to higher operating profit. Consolidated operating profit before other income and depreciation increased by 18.4% on a year-on-year basis to Rs. 44,257 crore from Rs. 37,364 crore in the previous year. Profit after Tax was higher by 17.2% at Rs. 27,630 crore as against Rs. 23,566 crore in the previous year.

The FY 2015-16 has been a year of outstanding achievement for downstream hydrocarbon businesses, notwithstanding persisting global economic uncertainty. Refining and petrochemicals business delivered record operating and financial performance. Refining earnings before interest and tax increased by 49.1% year-on-year basis to record level of Rs. 23,598 crore, supported by seven year high Gross Refining Margin and record crude throughput. During the year, Jamnagar refineries processed 69.6 MMT of crude. The Company was able to capitalise on the market conditions through its operational excellence, higher efficiency and well executed strategies around crude sourcing and product placement. The Petrochemicals business delivered strong earnings on the back of strong polymer market and higher volumes.

The Company is nearing the end of the biggest capex cycle in its history and in the history of the Indian corporate sector. The capital expenditure on a consolidated basis for the year ended March 31, 2016 aggregated Rs. 1,12,995 crore (US$17.1 billion) including exchange rate difference capitalisation. The capital expenditure was principally on account of ongoing expansion projects in petrochemicals and refining business at Jamnagar, Dahej and Hazira, Infocom and US Shale gas projects.

During the year, the Company added significant volumes in the polyester chain with the start-up of the 2.3 MMTPA Purified Terephthalic Acid plants (PTA) and the 650 KTA Polyethylene Terephthalate plant (PET). The PET resin plant is one of the largest bottle-grade PET resin capacity at a single location globally, making the Company a leading PET resin producer globally. The Company''s total PTA capacity has increased to 4.65 Million Metric Tonnes per Annum (MMTPA), with a global capacity share to 4%. The integration of the new PTA plant and PET plant will provide significant logistical advantage to the Company.

PERFORMANCE DURING THE FIRST QUARTER ENDED JUNE 30, 2016

The Board of Directors approved the Company''s Unaudited Financial Results (Standalone and Consolidated), based on the Indian Accounting Standards (Ind-AS), for the quarter ended June 30, 2016 which are as under:

STANDALONE

- Revenue from operations stood at Rs.59,493 crore (US$8.8 billion).

- PBDIT stood at Rs. 12,850 crore (US$1.9 billion).

- Profit before Tax stood at Rs. 9,976 crore (US$1.5 billion).

- Cash Profit stood at Rs. 9,734 crore (US$1.4 billion).

- Net Profit stood at Rs. 7,548 crore (US$1.1 billion).

- Gross Refining Margin stood at US$11.5 / bbl.

CONSOLIDATED

- Revenue from operations stood at Rs. 71,451 crore (US$10.6 billion).

- PBDIT stood at Rs. 13,589 crore (US$2.0 billion).

- Profit before Tax stood at Rs. 9,658 crore (US$1.4 billion).

- Cash Profit stood at Rs. 10,113 crore (US$1.5 billion).

- Net Profit stood at Rs. 7,113 crore (US$1.1 billion).

The Unaudited Financial Results for the first quarter are available on the Company''s website at the link: http://www.ril.com/ Investor Relations/Financial Reporting.aspx

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

DIVIDEND

The Board of Directors on March 10, 2016, declared an interim dividend of Rs.10.50 (i.e. @105%) on each fully paid equity share of Rs. 10/-, which was paid to the members, whose names appeared on the Register of Members of the Company on March 18, 2016.

Considering the capital requirement for ongoing business expansion, the Board of Directors do not recommend any final dividend on the equity shares and the interim dividend declared is the dividend on equity shares of the Company for the financial year ended March 31, 2016. The interim dividend declared and paid on equity shares including dividend tax thereon aggregated Rs. 3,717 crore.

The dividend payout for the year under review is in accordance with the Company''s policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.

MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

Management''s Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 read with Schedule V to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), is presented in a separate section forming part of the Annual Report.

The developments in business operations/performance of major subsidiaries consolidated with the Company are as below:

NORTH AMERICAN SHALE GAS

The year under review was one of the most challenging years in recent history for the Global Oil and Gas industry and for the North American Shale players, as sustained fall in benchmark prices and continued high benchmark drove weak realisation and proved to be strong headwind for the industry.

Financial performance of the Shale Gas business was impacted by strong macro headwinds with sharply lower price realisation driven by weak benchmark prices for Natural Gas (Henry Hub (HH)) and Condensate (WTI) that tested multi-year lows during the year.

The Company focused on proactive hedging to mitigate pressures while focusing simultaneously on export of Condensates that offer superior netbacks.

Opex trends remained encouraging across JVs. Tight control over costs and improvement efficiencies helped achieve sequential improvement in lease operating costs and overheads. Absolute opex were lower by over 4% across JVs, but could offset the impact of lower prices only to some extent.

Consequently, reflecting lower realisation, business Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) dropped by over 60% y-o-y to US$299 million (excluding exceptional items) in CY 2015.

Shale Gas business continues to effectively manage current adverse macro environment through disciplined investment and by realising efficiency gains Operationally, the business continued its strong per formance during CY 2015. The Shale Gas business effectively managed the sharp downturn in prices through reduction in activity levels and lowering costs. Focus was on liquidating existing well inventory to bring more wells online than drilled and delivering wells at much lower well costs. The Company is committed to ensuring preparedness for ramp-up across JVs, when market conditions improve. Gross JV production aggregated at ~1.26 BCFe/d for all 3 JVs and reflected a growth of 7% over the levels achieved in CY 2014.

RETAIL BUSINESS

Reliance Retail Limited has further consolidated its leadership position in the retail segment. Retail business continued its growth momentum and achieved significant milestones in the year.

Retail business posted a turnover of Rs, 21,612 crore during the year ended March 31, 2016 as against Rs, 17,640 crore during the previous year registering a strong growth of 22.5%. The business delivered record profits during the year with an EBIT of Rs, 506 crore as against Rs, 417 crore in the previous year.

The superlative growth has been attained due to strong operating discipline, focus on delivering differentiated product offering and accelerated expansion into newer geographies.

Store opening continued during the year and Reliance Retail attained the distinction of currently operating 3,383 stores.

DIGITAL SERVICES

Reliance Jio Infocomm Limited (Jio) is rolling out a state-of- the-art pan India digital services business. Apart from fixed and wireless broadband connectivity offering superior voice and data services on an all-Internet Protocol (IP) network, Jio will also offer end-to-end solutions encompassing the entire value chain across various digital services in key domains such as education, healthcare, security, communication, financial services, government-citizen interfaces and entertainment.

Jio took significant strides this year in optimising by real-time testing its service propositions across the country. RIL group employees, channel partners and vendors were amongst the first to test the true LTE experience as part of the employee launch. Results have been positive with high consumption trends across data and voice.

Jio is present in all of the 29 states of India with a direct physical presence in more than 18,000 urban and rural towns and over 1,50,000 villages. Jio has built the most sophisticated and one of the largest telecom networks in the country. Jio already has the largest fiber network and highest amount of LTE-ready spectrum as compared with the current industry players.

Jio is the first telecom operator to hold pan India Unified License. It holds 846.1 megahertz (MHz) of liberalised spectrum across the 800MHz, 1800MHz and 2300MHz bands. Jio has entered into agreements with Reliance Communications Limited (RCOM) for change in spectrum allotment in the 800MHz band from RCOM to Jio across 13 circles and sharing of spectrum in the 800MHz band across 21 circles (4 circles are still awaiting regulatory approval).

Jio plans to provide seamless 4G services using LTE technology in 800 MHz, 1800 MHz and 2300 MHz bands through an integrated ecosystem. This combined spectrum footprint across frequency bands provides significant network capacity and deep in- building coverage.

Currently the services are being used extensively by employees, vendors, partners and associates as part of the successful employee launch, which has till date resulted in over 15 lakh users on-boarded on the network. These test services were made available to all such users on trial basis with a view to obtain the feedback and progress towards a smooth and seamless commercial launch.

MEDIA AND ENTERTAINMENT

Network18 Media & Investments Limited (Network18) delivered a strong operating performance during FY 2015- 16. The operating revenues on a consolidated basis stood at Rs. 3,403 crore, up by 8.8% from Rs. 3,127 crore in FY 2014-15. It continued to grow profitably, achieving an EBIT of Rs.182 crore for FY 2015-16 consolidated, up by 27.3% from Rs. 143 crore in FY 2014-15.

Network18 continued to witness strong growth in its digital media content. It attracted over 20 million unique visitors per month through the year. Greater internet and mobile penetration has helped in achieving rapid growth of online media channels like Firstpost, Moneycontrol, BookMyShow, IBNLive and News18 websites in the broadcast business. Financial news channels retained their dominant leadership position in India, continuing to be the No.1 financial news channels in their genres. One new channel in English general entertainment was launched during the year while regional channels were rebranded. Network18 rebranding exercise has started bearing results with Colors emerging as India''s No.1 pay channel with a viewership share of 13% in December 2015.

CREDIT RATING

The Company''s financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agencies as given below:

Instrument Rating Agency Rating Outlook Remarks

International Debt S&P BBB Stable Two notches above India''s sovereign rating

International Debt Moody''s Baa2 Stable One notch above India''s sovereign rating

Long Term Debt CRISIL CRISIL AAA Stable Highest rating awarded by CRISIL

Long Term Debt India rating Ind AAA Stable Highest rating awarded by India Rating

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statement read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

During the year under review, companies listed in Annexure I to this Report have become or ceased to be Company''s subsidiaries, joint ventures or associate companies.

A statement containing the salient features of the financial statement of subsidiary/ associate/ joint venture companies is provided as Annexure A to the consolidated financial statement and therefore not repeated to avoid duplication.

The audited financial statement including the consolidated financial statement of the Company and all other documents required to be attached thereto may be accessed on the Company''s website at the link: http://www.ril.com/InvestorRelations/ FinancialReporting.aspx The financial statements of each of the subsidiary may also be accessed on the Company''s website at the link: http://www.ril.com/InvestorRelations/Downloads.aspx These documents will also be available for inspection on all working days i.e. except Saturdays, Sundays and Public Holidays at the Registered Office of the Company.

The Company has formulated a policy for determining material subsidiaries. The policy may be accessed at the link: http://www.ril.com/InvestorRelations/Downloads.aspx

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors state that:

a) in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by the Securities and Exchange Board of India (SEBI). The Company has also implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under the Listing Regulations forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

BUSINESS RESPONSIBILITY REPORT

As stipulated under the Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective is attached as part of Annual Report.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year, the Company acquired 18,00,000 Ordinary Shares of Reliance Global Business B.V., Netherlands (wholly- owned indirect subsidiary) from Reliance Industrial Investments and Holdings Limited (wholly-owned direct subsidiary) at par value for a total consideration of Euro 18,000 equivalent to Rs. 13.50 lakh with the approval granted by the Audit Committee and Board of Directors on March 10, 2016 and March 25, 2016, respectively. All other contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and at an arm''s length basis.

During the year, the Company had not entered into any contract/ arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and on dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link: http:// www.ril.com/InvestorRelations/Downloads.aspx

There are no materially significant related party transactions that may have potential conflict with interest of the Company at large.

Members may refer to Note 31 to the financial statement which sets out related party disclosures pursuant to AS - 18.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility and Governance Committee (CSR&G Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR Policy may be accessed on the Company''s website at the link: http://www.ril.com/InvestorRelations/Downloads.aspx

The key philosophy of all CSR initiatives of the Company is guided by three core commitments of Scale, Impact and Sustainability.

The Company has identified following focus areas for CSR engagement:

- Rural Transformation: Creating sustainable livelihood solutions, addressing poverty, hunger and malnutrition.

- Environment: Environmental sustainability, ecological balance, conservation of natural resources and promoting bio-diversity

- Health: Afordable solutions for healthcare through improved access, awareness and health seeking behavior.

- Education and Sports: Access to quality education, training and skill enhancement, building sports & skills in young students.

- Disaster Response: Managing and responding to disaster.

- Art, Heritage and Culture: Protection and promotion of India''s art, culture and heritage.

The Company would also undertake other need based initiatives in compliance with Schedule VII to the Act.

During the year, the Company has spent Rs. 652 crore (around 2.34% of the average net profits of last three financial years) on CSR activities as against the statutory requirement of Rs. 558 crore i.e. 2% of the average net profits of last three financial years.

The annual report on CSR activities is annexed herewith marked as Annexure II.

RISK MANAGEMENT

Your Company has an elaborate Group Risk Management Framework, which is designed to enable risks to be identified, assessed and mitigated appropriately. The Risk Management Committee of the Company has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company''s enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place, capable of addressing those risks.

The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company''s management systems, organisational structure, processes, standards, code of conduct and behaviors together form the Reliance Management System (RMS) that governs how the Group conducts the business of the Company and manages associated risks.

During the year, the Risk Management Committee reviewed the most significant risks for the Group with the respective risk owners. The Company continues to integrate Enterprise Risk Management, Internal Controls Management and Assurance frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities. This integration is enabled by all three being fully aligned across Group wide methodologies, processes and systems.

More details on Risk Management indicating development and implementation of Risk Management policy including identification of elements of risk and their mitigation are covered in Management''s Discussion and Analysis, which forms part of this Report.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls, with reference to financial statement. It has established the Reliance Management System (RMS), an integrated framework for managing risks and internal controls. The internal financial controls have been documented, digitised and embedded in the business processes. Such controls have been assessed during the year under review and were operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Act and the Articles of Association of the Company, Shri Nikhil R. Meswani and Shri Pawan Kumar Kapil, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.

The members approved the appointment of Shri Raminder Singh Gujral as an Independent Director with effect from June 12, 2015.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Act and the Listing Regulations.

The Company has devised a Policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which includes criteria for performance evaluation of the Non-executive Directors and Executive Directors. The evaluation process inter-alia considers attendance of Directors at Board and Committee meetings, effective participation, domain knowledge, compliance with code of conduct, vision and strategy, benchmarks established by global peers, etc.

The Company had engaged an external agency to carry out the Board Effectiveness Survey for the Financial Year 2015-16. The responses on Board Effectiveness Survey received from each Board member were compiled and a report thereon was submitted by the agency. The results were arrived at by the agency after analysing the responses with their database encompassing 1000 Board surveys. The Company''s Board was evaluated as ''Striving Board'', which is the highest rating for the performance of the Board considering the time commitment of the Board and the value addition done by it.

The Board carried out annual performance evaluation of the Board Committees and Individual Directors, internally. The Chairman of the respective Board Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Board Committees.

The performance evaluation of the Chairman and Non- Independent Directors was carried out by Independent Directors. The reports on performance evaluation of the Individual Directors were reviewed by the Human Resources, Nomination and Remuneration Committee and the Chairman of the Board held discussions with each Board member and provided feedback to them on the evaluation outcome.

The following policies of the Company are attached herewith marked as Annexure IIIA and Annexure IIIB:

a) Policy for selection of Directors and determining Directors independence; and

b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.

EMPLOYEES'' STOCK OPTION SCHEME

The Human Resources, Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees'' Stock Option Scheme of the Company which is in accordance with the applicable SEBI Regulations.

The issue of equity shares pursuant to exercise of options does not affect the Statement of Profit and Loss of the Company, as the exercise of options is made at the market price prevailing as on the date of the grant plus taxes as applicable.

There is no material change in Employees'' Stock Option Scheme during the year under review and the Scheme is in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations"). The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SBEB Regulations and the resolution passed by the members. The certificate would be placed at the Annual General Meeting for inspection by members.

Voting rights on the shares issued to employees under the Employees'' Stock Option Scheme are either exercised by them directly or through their appointed proxy.

The details as required to be disclosed under the SBEB Regulations are available on the Company''s website at the link: http://www.ril.com/InvestorRelations/Downloads.aspx

AUDITORS AND AUDITORS'' REPORT STATUTORY AUDITORS

As per the provisions of the Act, M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company upon their re-appointment at the ensuing Annual General Meeting will hold office till the conclusion of the Forty-third Annual General Meeting to be held in the year 2017. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation, adverse remark or disclaimer.

Keeping in view the requirements set out in the Act, the Board of Directors has identified M/s S R B C & CO LLP, Chartered Accountants, who have confirmed their willingness, as one of the prospective auditors to conduct audit of the Company''s financial statement from the financial year 2017-18, subject to meeting the eligibility conditions stipulated under the Act. Their appointment will be proposed and considered in the Annual General Meeting of the Company to be held in the year 2017.

COST AUDITORS

The Board has appointed the following cost auditors for conducting the audit of cost records of the Company for various segments for the FY 2015-16:

(i) For Textiles Business - M/s. Kiran J. Mehta & Co., Cost Accountants;

(ii) For Chemicals Business - M/s. Diwanji & Associates, Cost Accountants, M/s. K.G. Goyal & Associates, Cost Accountants, M/s. V.J. Talati & Co., Cost Accountants, M/s. Kiran J. Mehta & Co., Cost Accountants, M/s. Bandyopadhyaya Bhaumik & Co., Cost Accountants, M/s. Shome & Banerjee, Cost Accountants, M/s. Dilip M. Malkar & Co., Cost Accountants and Shri Suresh D. Shenoy, Cost Accountant;

(iii) For Polyester Business - Shri Suresh D. Shenoy, Cost Accountant, M/s. V. Kumar & Associates, Cost Accountants and M/s V.J. Talati & Co., Cost Accountants;

(iv) For Electricity Generation - M/s. Dilip M. Malkar & Co., Cost Accountants;

(v) For Petroleum Business – Shri Suresh D. Shenoy, Cost Accountant;

(vi) For Oil & Gas Business – M/s V.J. Talati & Co., Cost Accountants and M/s. Shome & Banerjee, Cost Accountants.

M/s. Shome & Banerjee, Cost Accountants, were nominated as the Company''s Lead Cost Auditors.

SECRETARIAL AUDITOR

The Board has appointed Dr. K.R. Chandratre, Practising Company Secretary, to conduct Secretarial Audit for the FY 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith marked as Annexure IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

DISCLOSURES MEETINGS OF THE BOARD

Six meetings of the Board of Directors were held during the year. The particulars of number of meetings held and attended by each Director are detailed in the Corporate Governance Report, which forms part of this Report.

AUDIT COMMITTEE

The Audit Committee comprises Independent Directors namely Shri Yogendra P. Trivedi (Chairman), Dr. Raghunath A. Mashelkar, Shri Adil Zainulbhai and Shri Raminder Singh Gujral. During the year, all the recommendations made by the Audit Committee were accepted by the Board.

CORPORATE SOCIAL RESPONSIBILITY AND GOVERNANCE COMMITTEE (CSR&G)

The Corporate Social Responsibility and Governance Committee comprises Shri Yogendra P. Trivedi (Chairman), Shri Nikhil R. Meswani, Dr. Dharam Vir Kapur and Dr. Raghunath A. Mashelkar.

VIGIL MECHANISM

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Regulations, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee. The vigil mechanism and whistle blower policy may be accessed on the Company''s website at the link: http://www. ril.com/Investor Relations/Downloads.aspx

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipients are provided in the standalone financial statement (Please refer to Notes 11, 12, 13, 17, 31 and 36 to the standalone financial statement).

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure V to this Report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed herewith as Annexure VI to this Report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report, which forms part of this Report.

Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report, which forms part of this Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

- Details relating to deposits covered under Chapter V of the Act.

- Issue of equity shares with differential rights as to dividend, voting or otherwise.

- Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees'' Stock Option Scheme referred to in this Report.

- The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

- Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

- No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

- No fraud has been reported by the Auditors to the Audit Committee or the Board.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company''s executives, staff and workers.

For and on behalf of the Board of Directors

Mukesh D. Ambani Chairman and Managing Director

Mumbai, July 15, 2016


Mar 31, 2015

Dear Members,

The Directors are pleased to present the Forty first Annual Report and the Company's audited financial statement for the financial year ended March 31,2015.

FINANCIAL RESULTS

The Company's financial performance, for the year ended March 31,2015 is summarised below:

2014-15 2013-14

Rs. crore $ million* Rs. crore $ million*

PROFIT BEFORE TAX 29,468 4,715 27,818 4,643

Less: Current Tax 6,124 980 5,812 970

Deferred Tax 625 100 22 4

PROFIT FOR THE YEAR 22,719 3,635 21,984 3,669

Add: Balance in Profit and Loss Account 9,326 1,973 8,610 1,853

SUB-TOTAL 32,045 5,608 30,594 5,522

LESS: APPROPRIATION:

Adjustment relating to Fixed Assets 318 51 - -

Transferred to General Reserve 18,000 2,880 18,000 3,004

Proposed dividend on Equity Shares 2,944 471 2,793 466

Tax on dividend 615 98 475 79

CLOSING BALANCE 10,168 2,108 9,326 1,973

* 1 $ = Rs. 62.5 Exchange Rate as on March 31, 2015 (1 $ = Rs. 59.915 as on March 31, 2014)

RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS

The highlights of the Company's performance are as under:

Revenue from operations decreased by 15.1% to Rs. 3,40,814 crore ($ 54.5 billion).

Exports decreased by 17.1% to Rs. 2,28,651 crore ($ 36.6 billion).

PBDIT increased by 1.3% to Rs. 40,323 crore ($ 6.5 billion).

Profit before Tax increased by 5.9% to Rs. 29,468 crore ($ 4.7 billion).

Cash Profit increased by 3.4% to Rs. 31,832 crore ($ 5.1 billion).

Net Profit increased by 3.3% to Rs. 22,719 crore ($ 3.6 billion).

Gross Refining Margin was $ 8.6 / bbl for the year ended March 31,2015.

The consolidated revenue from operations of the Company for year ended March 31, 2015 was down by

13% to Rs. 3,88,494 crore ($ 62.2 billion). The decline in turnover reflects a sharp fall in crude oil prices during the second half of the year. Strong operating performance from the refining business and stable petrochemicals business performance led to higher operating profits. Consolidated operating profits before other income and depreciation increased by 7.3% on a year on year basis from Rs. 34,799 crore to Rs. 37,364 crore. Profit after Tax was higher by 4.8% at Rs. 23,566 crore as against Rs. 22,493 crore in the previous year.

The financial year 2014-15 has been a very successful and important year for the Company. The Company's refining business delivered record earnings in a year when the collapse of oil prices unsettled the hydrocarbons market. During the year, RIL Jamnagar refineries processed 67.9 MMT of crude, achieving an average utilization rate of 110%. The Company was able to capitalize on the market conditions through its operational excellence, higher efficiency and well executed strategies around crude sourcing and product placement. The revenue from Petrochemicals segment decreased reflecting lower product prices resulting from sharp decline in crude and feedstock prices.

KG-D6 field produced 1.96 million barrels of crude oil, 0.32 million barrels of condensate and 158 BCF of natural gas in 2014-15, reflecting a growth of 12% in case of Condensate and a reduction of 3% and 12% of Crude Oil and Natural Gas respectively on a year on year basis. The decline in production was largely due to natural decline in fields coupled with partial shutdown of MA field due to Hudhud cyclone.

The capital expenditure of Reliance on a consolidated basis for 2014-15 was ' 1,00,247 crore including exchange rate difference capitalization. The capital expenditure was principally on account of ongoing expansion projects in petrochemicals and refining business at Jamnagar, Dahej and Hazira, Broadband access and US Shale gas projects.

During the year, the Company commissioned its new PBR Plant at Hazira, Gujarat, with capability to produce Nickel and Neodymium grade PBR. With the commissioning of this facility, the Company's total PBR capacity is now at 115 KTPA. RIL also started its new 150 KTPA SBR plant during the year which is expected to stabilise in the coming months.

During the last quarter of 2014-15, RIL started phase-1 PTA capacity of 1,150 KTPA and 650 KTPA of PET capacity at Dahej, Gujarat. Both these plants are expected to stabilise operations in the coming months and will be advantageously positioned to reap the benefits of integration. The new PET resin facility is one of the largest bottle-grade PET resin facility at a single location globally.

The new PTA plant has been built with Invista technology and is highly energy efficient and environment friendly. Indian market is currently deficit in PTA by over 1.5 MMTPA. The start-up of the new PTA plant at Dahej will take India closer to self-sufficiency in PTA.

The Company has made offerings of Senior Unsecured Notes priced under Rule 144A/Regulation S of the Securities Act, 1933 (USA) aggregating US $ 1.75 billion during January and February 2015. These funds will be utilized for ongoing capital expenditure.

The Company is one of India's largest contributors to the national exchequer primarily by way of payment of taxes and duties to various government agencies. During the year, a total of Rs. 33,322 crore ($ 5.3 billion) was paid in the form of various taxes and duties.

The Company is featured in the Fortune Global 500 list of the world's largest corporations for the eleventh consecutive year and was ranked 114th in terms of revenues and 155th in terms of profit.

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

DIVIDEND

Your Directors have recommended a dividend of Rs. 10 (i.e. 100%) per equity share (last year Rs. 9.50 per equity share) for the financial year ended March 31, 2015, amounting to Rs. 3,559 crore (inclusive of tax of Rs. 615 crore), one of the highest payout by any private sector company in India. The dividend payout is subject to approval of members at the ensuing Annual General Meeting.

The dividend will be paid to members whose names appear in the Register of Members as on May 11,2015 and in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

The dividend payout for the year under review has been formulated in accordance with the Company's policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The developments in business operations / performance of major subsidiaries consolidated with RIL are as below:

Shale Gas Business

Reliance's shale gas business continued on its growth trajectory with revenues and EBIT increasing 20.1% and 36.3% respectively, despite a challenging price environment. RIL's share of net sales volume was at 168 BCFe, compared to 131 BCFe in 2013. EBITDA of $ 775.1 million in 2014, was up 26% y-o-y.

Operationally, the business continued its strong performance during calendar year 2014, with production reaching the new record levels across the JVs. Gross JV production averaged at ~1.2 Bcfe/day, reflecting growth of 26% over the levels achieved in calendar year 2013. The business has reached an overall development maturity (with a significant part of the acreages held by production) and this provides adequate investment flexibility in managing the low price environment through prioritizing well capex in the most prolific areas.

Retail Business

Reliance Retail business grew by 21.2% to reach revenue of Rs. 17,640 crore as against Rs. 14,556 crore registered in the previous financial year. It continued to grow profitably, achieving profits before depreciation, finance cost and tax expense (PBDIT) of Rs. 784 crore, an increase of 116% on a year on year basis. The format sectors collectively witnessed a five-year CAGR of 31% in revenues.

During the year, Reliance Retail consolidated its market leadership in all of the focus sectors of digital, lifestyle and value sectors. During the year, Reliance Retail undertook an unprecedented store opening plan on an accelerated pace and added a net total of 930 stores to further increase its reach in the underserved markets. A total of 0.9 million square feet area was added. As on 31st March 2015, Reliance Retail operated 2,621 stores, covering an area of 12.5 million square feet across 200 cities.

Jio Infocomm

RIL's subsidiary, Reliance Jio Infocomm Limited (RJIL) is the only private player with Broadband Wireless Access (BWA) spectrum in all the 22 telecom circles of India. It plans to provide reliable fast internet connectivity through the 20 MHz, contiguous, pan-India BWA spectrum. RJIL has also successfully acquired 1800 MHz spectrum across 14 key circles in February, 2014.

In March 2015, RJIL has successfully acquired the right to use spectrum in 800 MHz & 1800 MHz in 13 key circles across India in the Spectrum Auction conducted by Department of Telecommunications (DoT), Government of India. With this acquisition, in addition to the pan-India 2300 MHz spectrum, RJIL has spectrum in either 800 MHz or 1800 MHz or both in 20 out of the total of 22 circles in the country. RJIL's total equivalent spectrum footprint has increased from 597.6 MHz to 751.1MHz (including uplink and downlink), strengthening its position as the largest holder of liberalized spectrum.

This combined spectrum footprint across frequency bands provides significant network capacity and deep in-building coverage. RJIL plans to provide seamless 4G services using LTE in 800 MHz, 1800 MHz and 2300 MHz through an integrated ecosystem.

RJIL is working aggressively in achieving the minimum roll out obligations as specified in the Notice Inviting Application for the spectrum auction in 2010, per the Test Schedule Test Procedure (TSTP) issued by DoT in March, 2015.

Media and Entertainment

During the year, Independent Media Trust (IMT), of which RIL is the sole beneficiary, acquired the control of Network18 Media & Investments Limited (Network18), including its subsidiary TV18 Broadcast Limited (TV18). This acquisition will differentiate Reliance's Jio Infocomm business by providing a unique amalgamation at the intersect of telecom, web and digital commerce via a suite of premier digital properties.

Network18 has interests in television, digital content, filmed entertainment, digital commerce, magazines, mobile content and allied businesses. Network18, through its group companies, operates a combined bouquet of over 30 channels. Network18 operates a number of digital and mobile properties offering digital content and commerce, including home shopping and online ticketing. It also publishes special interest magazines and has a presence in film production and distribution.

From the date of acquisition of control to 31st March, 2015, Network 18's operating revenue stood at Rs. 2,747 crore and EBIT at Rs. 135 crore, on a consolidated basis.

CREDIT RATING

The Company's financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agencies as given below:

Instrument Rating Agency Rating Outlook Remarks

International Debt S&P BBB+ Stable Two notches above India's sovereign rating

International Debt Moody's Baa2 Stable One notch above India's sovereign rating

Long Term Debt CRISIL AAA Stable Highest rating awarded by CRISIL

Long Term Debt Fitch Ind AAA Stable Highest rating awarded by Fitch

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

During the year under review, companies listed in Annexure I to this Report have become or ceased to

be Company's subsidiaries, joint ventures or associate companies. A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies as per the Companies Act, 2013 is provided as Annexure A to the consolidated financial statement and hence not repeated here for the sake of brevity. The Policy for determining material subsidiaries as approved may be accessed on the Company's website at the link: http://www.ril.com/getattachment/759df65c- 9a8d-42ff-a23c-e1c5d892e0c7/Policy-for-determining- Material-Subsidiaries.aspx

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors state that:

a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a 'going concern' basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

BUSINESS RESPONSIBILITY REPORT

As stipulated under the Listing Agreement, the Business Responsibility report describing the initiatives taken by the Company from environmental, social and governance perspective is attached as part of the Annual Report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: http://www.ril.com/getattachment/007dfb3a- 20aa-4b32-9a5b-ac51738bad00/Policy-on-Materiality-of- Related-Party-Transaction.aspx

Your Directors draw attention of the members to Note 32 to the financial statement which sets out related party disclosures.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility and Governance Committee (CSR&G Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR Policy may be accessed on the Company's website at the link: http://www.ril.com/getattachment/ d5fd70ef-e019-47e5-bb83-de2077874505/Corporate- Social-Responsibility-Policy.aspx

The key philosophy of all CSR initiatives of the Company is guided by three core commitments of Scale, Impact and Sustainability.

The Company has identified six focus areas of engagement which are as under:

Rural Transformation: Creating sustainable livelihood solutions, addressing poverty, hunger and malnutrition.

Health: Affordable solutions for healthcare through improved access, awareness and health seeking behaviour.

Education: Access to quality education, training and skill enhancement.

Environment: Environmental sustainability, ecological balance, conservation of natural resources.

Protection of National Heritage, Art and Culture: Protection and promotion of India's art, culture and heritage.

Disaster Response: Managing and responding to disaster.

The Company would also undertake other need based initiatives in compliance with Schedule VII to the Act.

During the year, the Company has spent Rs. 761 crore (around 2.85% of the average net profits of last three financial years) on CSR activities.

The Annual Report on CSR activities is annexed herewith marked as Annexure II.

RISK MANAGEMENT

During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. A Group Risk Management Policy was reviewed and approved by the Committee.

The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company's management systems, organisational structures, processes, standards, code of conduct and behaviors together form the Reliance Management System (RMS) that governs how the Group conducts the business of the Company and manages associated risks.

The Company has introduced several improvements to Integrated Enterprise Risk Management, Internal Controls Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities. This integration is enabled by all three being fully aligned across Group wide Risk Management, Internal Control and Internal Audit methodologies and processes.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Act and the Articles of Association of the Company, Shri Hital R. Meswani and Shri P.M.S. Prasad, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment. Shri Mahesh P. Modi, Independent Director of the Company passed away in February 2015. The Board places on record its deep appreciation for the valuable contribution made by him during his tenure as Director of the Company. Shri Maheswar Sahu, who was appointed as an additional director, demitted office as a Director effective March 30, 2015.

During the year under review, the members approved the appointments of Smt. Nita M. Ambani as a non-executive Non-Independent Director who is liable to retire by rotation and of Shri Mansingh L. Bhakta, Shri Yogendra P. Trivedi, Dr. Dharam Vir Kapur, Prof. Ashok Misra, Prof. Dipak C. Jain, Dr. Raghunath A. Mashelkar and Shri Adil Zainulbhai as Independent Directors who are not liable to retire by rotation. The members have also re-appointed Shri Mukesh D. Ambani as the Managing Director and Shri Hital R. Meswani and Shri P.M.S. Prasad as whole-time directors, designated as executive directors.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors and executive directors.

The Company had engaged two consultants for looking at the best practices prevalent in the industry and advising with respect to evaluation of Board members. On the basis of recommendations of the consultants and the Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors.

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: http://www.ril.com/getattachment/3b0559bd-20fd-4e3e- 8a35-1c0a8f090224/Familiarisation-Programme-for- Independent-Director.aspx

The following policies of the Company are attached herewith marked as Annexure IIIA and Annexure IIIB:

a) Policy for selection of Directors and determining Directors independence; and

b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.

EMPLOYEES' STOCK OPTION SCHEME

The Human Resources, Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees' Stock Option Scheme of the Company in accordance with the applicable SEBI Guidelines.

The applicable disclosures as stipulated under the SEBI Guidelines as on March 31, 2015 (cumulative position) with regard to the Employees' Stock Option Scheme (ESOS) are provided in Annexure IV to this Report.

The issue of equity shares pursuant to exercise of options does not affect the Statement of Profit and Loss of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable.

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the members. The certificate would be placed at the Annual General Meeting for inspection by members.

Voting rights on the shares issued to employees under the ESOS are either exercised by them directly or through their appointed proxy.

AUDITORS AND AUDITORS' REPORT Statutory Auditors

M/s. Chaturvedi & Shah, Chartered Accountants, Deloitte Haskins & Sells LLP, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment.

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

Cost Auditors

The Board has appointed the following cost auditors for conducting the audit of cost records of the Company for various segments for the financial year 2014-15:

(i) For Textiles Business - M/s. Kiran J. Mehta & Co., Cost Accountants;

(ii) For Chemicals Business - M/s. Diwanji & Associates, Cost Accountants, M/s. K.G. Goyal & Associates, Cost Accountants, M/s. V.J. Talati & Co., Cost Accountants, M/s. Kiran J. Mehta & Co., Cost Accountants,

M/s. Bandyopadhyaya Bhaumik & Co., Cost Accountants, M/s. Shome & Banerjee, Cost Accountants and M/s. Dilip M. Malkar & Co., Cost Accountants;

(iii) For Polyester Business - Shri Suresh D. Shenoy, Cost Accountant and M/s. V. Kumar & Associates, Cost Accountants;

(iv) For Electricity Generation - M/s. Dilip M. Malkar & Co., Cost Accountants;

(v) For Petroleum Business - M/s. V.J. Talati & Co., Cost Accountants; and

(vi) For Oil & Gas Business - Shri Suresh D. Shenoy, Cost Accountant and M/s. Shome & Banerjee, Cost Accountants.

M/s. Shome & Banerjee, Cost Accountants, were nominated as the Company's Lead Cost Auditor.

Secretarial Auditor

The Board has appointed Dr. K.R. Chandratre, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure V to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

DISCLOSURES:

CSR&G Committee

The CSR&G Committee comprises Shri Yogendra P. Trivedi (Chairman), Shri Nikhil R. Meswani, Dr. Dharam Vir Kapur and Dr. Raghunath A. Mashelkar as other members.

Audit Committee

The Audit Committee comprises Independent Directors namely Shri Yogendra P. Trivedi (Chairman), Dr. Raghunath A. Mashelkar and Shri Adil Zainulbhai as other members. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the link: http://www.ril.com/getattachment/c5c2d3f9-8a4d-4075- 830f-33d9917d05b4/Vigil-Mechanism-and-Whistle- Blower-Policy.aspx

Meetings of the Board

Seven meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance on page no. 128 of this Annual Report.

Particulars of Loans given, Investments made, Guarantees given and Securities provided

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note 11, 12, 13 and 37 to the standalone financial statement).

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure VI to this Report.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure VII to this Report.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their email addresses and is available on the Company's website.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. I ssue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

For and on behalf of the Board of Directors

Mukesh D. Ambani

Chairman and Managing Director

April 17, 2015


Mar 31, 2014

Dear Members,

The Directors are pleased to present the 40th Annual Report and the Companys audited accounts for the financial year ended March 31,2014.

Financial Results

The Companys financial performance, for the year ended March 31,2014 is summarised below:

2013-14 2012-13 Rs. crore $ million* Rs. crore $ million*

Profit before Tax 27,818 4,643 26,284 4,842

Less: Current Tax 5,812 970 5,244 966

Deferred Tax 22 4 37 7

Profit for the year 21,984 3,669 21,003 3,869

Add: Balance in Profit and Loss Account 8,610 1,853 7,609 1,668

Add: On Amalgamation - - 1,116 206

30,594 5,522 29,728 5,743

Less: Appropriation:

Transferred to General Reserve 18,000 3,004 18,000 3,316

Transferred to Capital Redemption Reserve on buy back of Equity Shares - - 43 8

Proposed Dividend on Equity Shares 2,793 466 2,628 484

Tax on Dividend 475 79 447 82

Closing Balance 9,326 1,973 8,610 1,853

* 1 $ = Rs. 59.915 Exchange Rate as on March 31,2014(1 $ =Rs. 54.285 as on March 31, 2013)

Results of Operations

Operating in a volatile and uncertain environment, the Company demonstrated the resilience of its business model. The Companys best-in-class refining configuration and integrated petrochemical business enabled it to deliver robust profits in the financial year 2013-14.The highlights of the Companys performance are as under:

- Revenue from operations increased by 8.1% toRs. 401,302 crore ($ 67.0 billion)

- Exports increased by 15.3% to Rs. 275,825 crore ($ 46.0 billion)

- PBDIT increased by 2.7% at Rs. 39,813 crore ($ 6.6 billion)

- Profit Before Tax increased by 5.8% at Rs. 27,818 crore ($4.6 billion)

- Cash Profit increased by 1.0% to Rs. 30,795 crore ($5.1 billion)

- Net Profit increased by 4.7% to Rs. 21,984 crore ($3.7 billion)

- Gross Refining Margin was $ 8.1 / bbl for the year ended March 31, 2014

The consolidated revenue from operations of the Company for the year ended March 31, 2014 was Rs. 446,339 crore ($ 74.5 billion), an increase of 9.3% on a year-on-year basis.

The Company is one of Indias largest contributors to the national exchequer primarily by way of payment of taxes and duties to various government agencies. During the year, a total ofRs. 31,374 crore ($ 5.2 billion) was paid in the form of various taxes and duties.

The Company featured in the Fortune Global 500 list of the worlds largest corporations for the tenth consecutive year and was ranked 107th in terms of revenues and 128th in terms of profits.

Dividend

Your Directors have recommended a dividend of Rs. 9.50 per equity share (last year Rs. 9.00 per equity share) for the financial year ended March 31, 2014, amounting to Rs. 3,268 crore (inclusive of tax of Rs. 475 crore), one of the highest payout by any private sector domestic company. The dividend payout is subject to approval of members at the ensuing Annual General Meeting.

The dividend will be paid to members whose names appear in the Register of Members as on May 19, 2014; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

The dividend payout for the year under review has been formulated in accordance with shareholders aspirations and the Companys policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.

Credit Rating

The Company continues to have the highest domestic credit ratings of AAA from CRISIL (S&P subsidiary) and India Ratings & Research (a Fitch Group Company). Moodys has reaffirmed investment grade rating for international debt, as Baa2 positive outlook (local currency issuer rating), which is one notch higher than the countrys sovereign rating. During the year, S&P upgraded the Companys international debt rating to BBB+ negative outlook, which is now two notches above Indias sovereign rating. Strong credit ratings by leading international agencies reflect the Companys financial discipline and prudence.

Employees Stock Option Scheme

The Human Resources, Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees Stock Option Scheme of the Company in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the SEBI Guidelines).

The applicable disclosures as stipulated under the SEBI Guidelines as on March 31,2014 (cumulative position) with regard to the Employees Stock Option Scheme are provided in Annexure I to this Report.

The issuance of equity shares pursuant to exercise of options does not affect the Statement of Profit and Loss of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable.

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The certificate would be placed at the Annual General Meeting for inspection by members.

Managements Discussion and Analysis Report

Managements Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The developments at our major subsidiaries are as below:

Shale Gas Business

The US shale gas business is now a material contributor to RILs consolidated profits. The shale business delivered revenues of $ 819 million and EBITDA of $ 616 million in 2013 on the back of a 52% growth in volumes to 154BCFe. Proved reserves of shale gas increased 43% to 2.66 TCFe.

Retail Business

Reliance Retail has become Indias largest retailer by revenues. Financial Year (FY) 2013-14 Revenues grew 34% to Rs. 14,496 crore, while EBITDA was at Rs. 363 crore. The retail business also achieved two major milestones in FY 2013-14. It crossed 10 million square feet of retail space and broke even on a net profit basis during the year. The Company enhanced its presence across various format sectors. Reliance Retail now operates 1,691 stores across 146 cities.

Reliance Jio Infocomm

Reliance Jio Infocomm Limited (RJIL) successfully acquired the right to use spectrum in 14 key circles across India in the 1,800 MHz band in the spectrum auction conducted by Department of Telecommunications (DoT), Government of India (Gol). RJIL will use this spectrum in conjunction with its pan India 2,300 MHz spectrum acquired earlier to provide seamless 4G services using FDD-LTE on 1,800 MHz and TDD-LTE on 2,300 MHz through an integrated ecosystem. Following the acquisition, RJIL holds the largest quantum of liberalised spectrum, with the longest residual spectrum life.

Corporate Social Responsibility and Governance Committee

During the year, your directors have constituted the Corporate Social Responsibility and Governance Committee (CSR&G Committee) comprising Shri Yogendra P. Trivedi as the Chairman and Shri Nikhil R. Meswani, Dr. Dharam Vir Kapur and Dr. Raghunath A. Mashelkar as other members.

The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities.

Consolidated Financial Statement

In accordance with the Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

Subsidiaries

Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Managements Discussion and Analysis Report.

In accordance with the General Circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The Company will provide a copy of separate annual accounts in respect of each of its subsidiary to any shareholder of the Company who asks for it and the said annual accounts will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies.

Directors

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Shri Adil Zainulbhai was appointed as an Additional Director designated as an Independent Director w.e.f. December 20, 2013 and he shall hold office up to the date of the ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing Shri Adil Zainulbhai for appointment as an Independent Director.

In terms of the Articles of Association of the Company, Shri Ramniklal H. Ambani, Shri Nikhil R. Meswani, Shri Yogendra P. Trivedi and Prof. Ashok Misra, Directors retire at the ensuing Annual General Meeting. The Company has received requisite notices in writing from members proposing Shri Yogendra P. Trivedi and Prof. Ashok Misra for appointment as Independent Directors.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that:

i) in the preparation of the annual accounts for the year ended March 31, 2014, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the profit of the Company for the year ended on that date;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the Directors have prepared the annual accounts of the Company on a going concern basis.

Auditors and Auditors Report

M/s. Chaturvedi & Shah, Chartered Accountants, Deloitte Haskins & Sells LLP, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received letters from all of them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141 (3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

The Notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Company has appointed the following cost auditors for conducting the audit of cost records of the Company for the financialyear2013-14:

(i) For the Textiles Business - M/s. Kiran J. Mehta & Co., Cost Accountants;

(ii) For the Chemicals Business - M/s. Diwanji & Associates, Cost Accountants, M/s. K.G. Goyal & Associates, Cost Accountants, M/s. V.J. Talati & Co., Cost Accountants, M/s. Kiran J. Mehta & Co., Cost Accountants, M/s. Bandyopadhyaya Bhaumik&Co., Cost Accountants, M/s. Shome & Banerjee, Cost Accountants and M/s. Dilip M. Malkar & Co., Cost Accountants;

(iii) For the Polyester Business - Shri Suresh D. Shenoy, Cost Accountant and M/s. V. Kumar & Associates, Cost Accountants;

(iv) For Electricity Generation - M/s. Dilip M. Malkar & Co., Cost Accountants;

(v) For Petroleum Business - M/s. V.J. Talati & Co., Cost Accountants; and

(vi) For Oil & Gas Business - M/s. Kiran J. Mehta & Co., Cost Accountants, Shri Suresh D. Shenoy, Cost Accountant, M/s. Bandyopadhyaya Bhaumik&Co., Cost Accountants and M/s. Shome & Banerjee, Cost Accountants.

M/s. Shome & Banerjee, Cost Accountants, were nominated as the Companys Lead Cost Auditor.

Secretarial Audit Report

As a measure of good corporate governance practice, the Board of Directors of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct the Secretarial Audit. The Secretarial Audit Report for the financial year ended March 31, 2014, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, the 98 sections of the Companies Act, 2013 notified vide Ministry of Corporate Affairs Gazette Notification No. S.O. 2754(E) dated September 12, 2013, the Securities Contracts (Regulation) Act, 1956, Depositories Act, 1996, the Foreign Exchange Management Act, 1999 to the extent applicable to Overseas Direct Investment (ODI), Foreign Direct Investment (FDI) and External Commercial Borrowings (ECB), all the Regulations and Guidelines of SEBI as applicable to the Company, including the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, Listing Agreements with the Stock Exchanges and the Memorandum and Articles of Association of the Company.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the annexure to the Directors Report. Having regard to the provisions of Section 219(1)(b)(iv)of the said Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are provided in Annexure II to this Report.

Transfer of Amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on June 06, 2013 (date of last Annual General Meeting) on the Companys website (www.ril.com), as also on the Ministry of Corporate Affairs website.

Corporate Governance

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally.

The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to the Report on corporate governance.

Business Responsibility Report

SEBI, vide its Circular CIR/CFD/DIL/8/2012 dated August 13, 2012, mandated the top 100 listed entities, based on market capitalisation at BSE and NSE, to include Business Responsibility Report (BRR) as part of the Annual Report describing the initiatives taken by the companies from Environmental, Social and Governance perspective. Pursuant to the above, the Stock Exchanges included in the Listing Agreement a suggested framework of a BRR. Accordingly, the BRR is attached which forms part of the Annual Report.

Acknowledgement

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks. Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Companys executives, staff and workers.

For and on behalf of the Board of Directors

Mukesh D. Ambani

Chairman and Managing Director

April 18, 2014


Mar 31, 2013

Dear Shareholders,

The Directors are pleased to present the 39th Annual Report and the audited accounts for the financial year ended March 31, 2013.

Financial Results

The financial performance of the Company, for the year ended March 31, 2013 is summarised below:

2012-13 2011-12 Rs. crore $ Mn* Rs. crore $ Mn*

Profit before Tax 26,284 4,842 25,750 5,061

Less: Current Tax 5,244 966 5,150 1,012

Deferred Tax 37 7 560 110

Profit for the year 21,003 3,869 20,040 3,939

Add: Balance in Profit & Loss Account 7,609 1,668 6,514 1,453

Add: On Amalgamation 1,116 206 - -

29,728 5,743 26,554 5,392

Less: Appropriation:

Transferred to General Reserve 18,000 3,316 16,000 3,145

Transferred to Capital Redemption Reserve on buy back of Equity Shares 43 8 4 1

Proposed Dividend on Equity Shares 2,628 484 2,531 497

Tax on Dividend 447 82 410 81

Closing Balance 8,610 1,853 7,609 1,668

* 1 $ = Rs. 54.285 Exchange Rate as on March 31, 2013 (1 $ = Rs. 50.875 as on March 31, 2012)

Results of Operations

The global economy in the Financial Year (FY) 2012-13 improved slowly, but was short on expectations. Several European economies experienced recession due to high unemployment, banking fragility, fiscal tightening and sluggish growth. The U.S. economy improved marginally, driven mainly by housing and the consumer sectors; however, capital investments remained sluggish. Among the Asian economies, China going through a political transition, experienced considerably slow growth. Deceleration in industrial output and exports weakened India''s economic growth significantly.

FY 2012-13 proved to be a challenging year amidst global economic uncertainties and disturbances in many parts of the world. Despite these constraints and challenging environment, the Company performed reasonably well and the highlights of the performance are as under:

- Revenue from operations increased by 9.2% to Rs. 371,119 crore ($68.4 billion)

- Exports increased by 15% to Rs. 239,226 crore ($ 44.1 billion)

- PBDIT decreased by 2.6% at Rs. 38,785 crore ($ 7.1 billion)

- Profit Before Tax increased by 2.1% at RS. 26,284 crore ($ 4.8 billion)

- Cash Profit was at Rs. 30,505 crore ($ 5.6 billion)

- Net Profit increased by 4.8% to Rs. 21,003 crore ($3.9 billion)

- Gross Refining Margin was $ 9.2 / bbl for the year ended March 31, 2013

The consolidated revenue from operations of the Company for the year ended March 31, 2013 was Rs. 397,062 crore, an increase of 10.8% on a Year-on-Year basis.

The Company is one of India''s largest contributors to the national exchequer primarily by way of payment of taxes and duties to various government agencies. During the year, a total of RS. 28,950 crore ($ 5.3 billion) was paid in the form of various taxes and duties.

The Company featured in the Fortune Global 500 list of the world''s largest corporations for the eighth consecutive year. The company was ranked 99th based on sales and 130th based on profits.

Buy-Back of Equity Shares

The Buy-back Offer announced by the Company on January 20, 2012 was closed on January 19, 2013. Pursuant to the said Buy-back, the Company bought back and extinguished 4,62,46,280 equity shares of Rs. 10 each of an aggregate face value of Rs. 46,24,62,800 (which includes 36,63,431 equity shares of Rs. 10 each bought back in FY 2011-12). Consequent to the Buy-back, the paid- up equity share capital of the Company as on March 31, 2013 (excluding allotment of shares made during the year pursuant to Employees Stock Option Scheme) stood at RS. 3228,47,61,257.

The Buy-back programme was the largest ever implemented to-date in the history of Indian capital markets and was EPS (Earnings Per Share) accretive for the Company. It is expected to supplement earnings growth from operations, for higher EPS, in the near future.

Dividend

Your Directors have recommended a dividend of Rs. 9.00 per Equity Share (last year Rs. 8.50 per Equity Share) for the financial year ended March 31, 2013, amounting to Rs. 3075 crore (inclusive of tax of Rs. 447 crore and net of reversal of excess provision of previous year) one of the highest payout by any private sector domestic company. The dividend will be paid to members whose names appear in the Register of Members as on May 13, 2013; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

The dividend payout for the year under review has been formulated in accordance with shareholders'' aspirations and the Company''s policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.

Credit Rating

The Company continues to have the highest domestic credit ratings of AAA from CRISIL (S&P subsidiary) and Fitch. Moody''s and S&P have reaffirmed investment grade ratings for international debt of the Company, as Baa2 positive outlook (local currency issuer rating) and BBB positive outlook respectively. The Company''s international rating from Moody''s and S&P is higher than the country''s sovereign rating. Strong credit ratings by leading international agencies reflect the Company''s financial discipline and prudence.

Employees'' Stock Option Scheme

The Employees'' Stock Compensation Committee, constituted in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (‘the SEBI Guidelines''), administers and monitors the Employees'' Stock Option Scheme of the Company.

The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2013 (cumulative position) are provided in Annexure I to this Report.

The issuance of equity shares pursuant to exercise of Options does not affect the statement of profit and loss of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable.

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

Management''s Discussion and Analysis Report

Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

Some of the Major events of the year include the following:

RIL-BP Partnership

In its second year of the partnership, Reliance Industries Limited (RIL) and BP combined their expertise in deepwater exploration and development and operations in India. Both the teams worked closely to understand the complex geology of the east-coast of India including KG-D6 block. The efforts are on to map out an exploration and development campaign that will efficiently target high quality prospects in deeper zones and optimise existing as well as future development plans.

Smart Transformation At Reliance (STAR)

The Company has embarked on one of the largest business transformation project STAR in order to make RIL "FUTURE READY". It would help the Company bring end-to-end digital chain to free up resources, will also help enhance organisational entrepreneurship, create a world-class human resource framework to retain talent and fulfill mission of being an "Employer of Choice".

Shale Gas Business

FY 2012-13 was a pivotal year for RIL''s North American Shale Gas business. It gained significant growth momentum and delivered superior performance despite adverse market conditions imposed by low gas prices and higher service costs. It was landmark year strategically, as Reliance completed carry obligations in the Carrizo and Pioneer JVs and transitioned into post-carry mode, allowing for improved governance rights and increased alignment on activity levels.

Retail Business

The retail business continued its growth journey during the year with new store launches as well as strong same store sales growth. The business accomplished a milestone by crossing a revenue of Rs. 10,000 crore during the year. The business grew by 42% to reach revenue of Rs. 10,800 crore as against Rs. 7,599 crore registered in the previous financial year. The business has achieved cash break- even with earnings before depreciation, finance cost and tax expense (EBDIT) of Rs. 78 crore. The milestone of crossing Rs. 10,000 crore revenue and reaching cash break- even at EBDIT level is a significant step in Reliance Retail''s journey towards attaining market leadership by democratizing access to all types of products and services across all segments for the discerning Indian customer.

During the year under review, the realignment and consolidation of the various formats of retail businesses being carried on by the subsidiary companies of Reliance Retail Limited, was proposed, subject to necessary approvals of the High Court of Judicature at Bombay.

The consolidation exercise and consequent reduction in the number of companies will help in enhancing operational flexibility, efficiencies and greater and optimal utilisation of resources and also lead to significant reduction in the multiplicity of legal and regulatory compliances.

Infocomm Business

Reliance Jio Infocomm Limited "RJIL" (formerly Infotel Broadband Services Limited) with Broadband Wireless Access (BWA) spectrum in all the 22 telecom circles of India, plans to provide reliable fast internet connectivity through the 20 MHz, contiguous, Pan-India BWA spectrum. In addition to connectivity, RJIL also plans to enable end-to-end solutions that address the entire value chain across various digital services in key domains of national interest such as education, healthcare, security, financial services, government-citizen interfaces and entertainment. RJIL aims to comprehensively address the requisite components of the customer need, thereby fundamentally enhancing the opportunity and experience of hundreds of millions of users in India.

RJIL has finalized key agreements with its technology partners, service providers, infrastructure providers, application partners, device manufacturers and other strategic partners for the project. It aims to create a digital eco system which can be used to benefit the industry, the government and, above all, the people of this country. RJIL has also completed the detailed planning for Pan India implementation of the infrastructure needed for the project.

Reliance Haryana SEZ

The Model Economic Township (MET) has been envisioned to be developed as an industrial infrastructure to support economic growth in a public private partnership framework with the Government of Haryana through HSIIDC Limited (a Government of Haryana company).

The start-up phase of operationalization of MET in the district Jhajjar of Haryana has commenced during the year.

Reliance Jamnagar Infrastructure Limited

During the year under review, Reliance Jamnagar Infrastructure Limited, a wholly owned subsidiary which was acting as a co-developer in the Jamnagar SEZ got amalgamated with the Company.

Expansion of Operations

Your Company has commenced implementing significant expansion plans in the Petrochemical business and on completion over the next 3 to 4 years, the overall volume is expected to increase by more than 60%. Your Company is also setting up the world''s largest petcoke gasification facility at Jamnagar to convert the lowest cost fossil fuels - coal and coke into gas.

Consolidated Financial Statements

In accordance with the Accounting Standard (AS) -21 on Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

Subsidiaries

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies.

Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management''s Discussion and Analysis Report.

Directors

Shri Mahesh P. Modi, Dr. Dharam Vir Kapur, Dr. Raghunath A. Mashelkar and Shri Pawan Kumar Kapil, Directors, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the year ended March 31, 2013, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a ‘going concern'' basis.

Auditors and Auditors'' Report

M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received letters from all of them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for re-appointment within the meaning of Section 226 of the said Act.

The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Company has appointed the following cost auditors for conducting Cost Audit for the financial year 2012-13:

(i) For the Textiles Business - M/s. Kiran J. Mehta & Co, Cost Accountants;

(ii) For the Chemicals Business - M/s. Diwanji & Associates, Cost Accountants, M/s. K. G. Goyal & Associates, Cost Accountants, M/s. V J. Talati & Co., Cost Accountants, M/s. Bandyopadhyaya Bhaumik & Co., Cost Accountants, M/s Shome & Baneijee, Cost Accountants, M/s. Kiran J. Mehta & Co, Cost Accountants and M/s. Dilip M. Malkar & Co., Cost Accountants;

(iii) For the Polyester Business - Shri Suresh D. Shenoy, Cost Accountant, M/s. V. Kumar & Associates, Cost Accountants;

(iv) For Electricity Generation - M/s. Dilip M. Malkar & Co., Cost Accountants;

(v) For Petroleum Business - M/s. V. J. Talati & Co., Cost Accountants; and

(vi) For Oil & Gas Business - M/s Kiran J. Mehta & Co., Cost Accountants; Shri Suresh D. Shenoy, Cost Accountant; M/s Bandyopadhyaya Bhaumik & Co., Cost Accountants and M/s Shome & Banerjee, Cost Accountants.

M/s Shome & Banerjee, Cost Accountants have been nominated as the Lead Cost Auditor of the Company.

Secretarial Audit Report

As a measure of good corporate governance practice, the Board of Directors of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct the Secretarial Audit. The Secretarial Audit Report for the financial year ended March 31, 2013, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Securities Contracts (Regulation) Act, 1956, Depositories Act, 1996, The Foreign Exchange Management Act, 1999 to the extent applicable to Overseas Direct Investment (ODI), Foreign Direct Investment (FDI) and External Commercial Borrowings (ECB), all the Regulations and Guidelines of SEBI as applicable to the Company, including The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, The Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, Listing Agreements with the Stock Exchanges and the Memorandum and Articles of Association of the Company.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in Annexure-II to this Report.

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on June 07, 2012 (date of last Annual General Meeting) on the website of the Company (www.ril.com), as also on the Ministry of Corporate Affairs website.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Business Responsibility Report

SEBI, vide its Circular CIR/CFD/DIL/8/2012 dated August 13, 2012, mandated the top 100 listed entities, based on market capitalisation at BSE and NSE, to include Business Responsibility Report as part of the Annual Report describing the initiatives taken by the companies from Environmental, Social and Governance perspective.

Accordingly, the Business Responsibility Report is attached and forms part of the Annual Report.

Acknowledgement

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani

Chairman and Managing Director

April 16, 2013


Mar 31, 2012

The Directors are pleased to present the 38th Annual Report and the audited accounts for the financial year ended March 31, 2012.

Financial Results

The financial performance of the Company, for the year ended March 31, 2012 is summarised below:

2011-2012 2010-2011 Rs. crore $ Mn* Rs crore $ Mn*

Profit before Depreciation and Amortisation Expenses, Finance Costs and Tax Expenses 39,811 7,825 41,178 9,234

Less: Finance Costs 2,667 524 2,328 522

Depreciation and Amortisation Expenses 13,734 16,241

Less: Transfer from Revaluation Reserve 2,340 11,394 2,240 2,633 13,608 3,051

Profit before Tax 25,750 5,061 25,242 5,661

Less: Current Tax 5,150 1,012 4,320 969

Deferred Tax 560 110 636 143

Profit for the year 20,040 3,939 20,286 4,549

Add: Balance in Profit & Loss Account 6,514 1,453 5,000 1,114

26,554 5,392 25,286 5,663

Less: Appropriation:

Transferred to General Reserve 16,000 3,145 16,000 3,588

Transferred to Captial Redemption

Reserve on buy back of Equity Shares 4 1 - -

Proposed Dividend on Equity Shares 2,531 497 2,385 535

Tax on Dividend 410 81 387 87

Closing Balance 7,609 1,668 6,514 1,453

* 1 $ = Rs 50.875 Exchange Rate as on March 31, 2012 (1 $ = Rs 44.595 as on March 31, 2011)

Results of Operations

FY2011-12 was a challenging year. The global economy, barely a year after recession, witnessed lower economic growth, resulting primarily from the Euro Zone debt crisis and high oil prices, which were fuelled by uncertainties of supply. Rising unrest in Middle East and North Africa resulted in unprecedented levels of crude oil volatility. The European economies stagnated and the US witnessed a downgrade in its credit rating, while the growth engines of the global economy, China and India were forced to tighten liquidity to tame rising inflation. In addition, civil unrest in Libya and the tsunami in Japan posed further challenges. Despite these constraints and the challenging environment, the Company performed reasonably well and the highlights of the performance are as under:

-Revenue from operations increased by 31.4% to Rs 339,792 crore ($66.8 billion)

-Exports increased by 41.8% to Rs 208,042 crore ($ 40.9 billion)

-PBDIT decreased by 3.3% to Rs 39,811 crore ($ 7.8 billion)

-Profit Before Tax increased by 2.0% to Rs 25,750 crore ($ 5.1 billion)

-Cash Profit decreased by 7.3% to Rs 31,994 crore ($ 6.3 billion)

-Net Profit decreased by 1.2% to Rs 20,040 crore ($3.9 billion)

-Gross Refining Margin at $ 8.6 / bbl for the year ended March 31, 2012

The Company is one of India's largest contributors to the national exchequer primarily by way of payment of taxes and duties to various government agencies. During the year, a total of Rs 28,197 crore ($ 5.5 billion) was paid in the form of various taxes and duties.

Buy Back of Equity Shares

The Board of Directors of the Company at its meeting held on January 20, 2012 unanimously approved the Buy- back of up to twelve crore fully paid-up equity shares of Rs 10 each (hereinafter referred to as "Buy-back"), at a price not exceeding Rs 870 per equity share, payable in cash, up to an aggregate amount not exceeding Rs 10,440 crore, representing approximately 7.22% of the Company's total paid-up Equity Capital and Free Reserves as on March 31, 2011. The Buy-back is being made out of the free reserves and / or the securities premium account of the Company, from the open market through Stock Exchange(s) in India, as per the provisions contained in the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998. The Buy-back Offer is open up to January 19, 2013 or such earlier date as may be determined by the Company after necessary compliances.

Pursuant to the aforesaid Buy-back Offer, the Company has bought back and extinguished 36,63,431 equity shares of Rs 10 each of an aggregate face value of Rs 3,66,34,310 as of March 31, 2012. Consequent to the Buy-back, the paid- up equity share capital of the Company as on March 31, 2012 has been reduced to Rs 3271,05,93,400. The Buy Back Committee constituted by the Board oversees all matters pertaining to the Buy-back of equity shares of the Company.

Dividend

Your Directors have recommended a dividend of Rs 8.50 per Equity Share (last year Rs 8 per Equity Share) for the financial year ended March 31, 2012, amounting to Rs 2,941 crore (inclusive of tax of Rs 410 crore) one of the highest ever payout by any private sector domestic company. The dividend will be paid to members whose names appear in the Register of Members as on June 1, 2012; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

The dividend payout for the year under review has been formulated in accordance with shareholders-aspirations and the Company's policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.

Credit Rating

The Company continues to have the highest domestic credit ratings of AAA from CRISIL (S&P subsidiary) and Fitch. Moody's and S&P have reaffirmed investment grade ratings for international debt of the Company, as Baa2 positive outlook (local currency issuer rating) and BBB positive outlook respectively. The Company's international rating from Moody's and S&P is higher than the country's sovereign rating. Strong credit ratings by leading international agencies reflect the Company's financial discipline and prudence.

Employees Stock Option Scheme The Company implemented the Employees Stock Option Scheme (''Scheme'') in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('the SEBI Guidelines'). The Employees Stock Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the Scheme. The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2012 (cumulative position before opening the Buy back offer) are provided in the Annexure I to this Report.

The issuance of equity shares pursuant to exercise of Options does not affect the profit and loss account of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable.

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

Management's Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

Some of the Major events of the year include the following: RIL - BP Partnership

Reliance Industries Limited (RIL) and BP announced the incorporation of India Gas Solutions Private Limited, a 50:50joint venture (JV) company, which will focus on global sourcing and marketing of natural gas in India. This joint venture company is a significant step in cementing the relationship between RIL and BP, and it establishes the commitment of both the parties to the Indian market. The demand for gas has been growing at an exponential rate and both RIL and BP anticipate natural gas to emerge as the preferred choice of fuel, given its properties as a cleaner and more sustainable fuel source.

Shale Gas

RIL entered into three JVs in 2010 as part of its strategic focus on pursuing partnerships with experienced and successful operators in the fast growing resource base of shale gas in North America. In addition to these JVs with Chevron and Carrizo in Marcellus shale play of Pennsylvania and Pioneer Natural Resources in Eagle Ford shale Play of South Texas, RIL and Pioneer also partnered in the development of midstream assets through an equity investment for servicing the gathering needs of Pioneer upstream JV. Reliance's current assets are now most strategically located within the premier shale plays of the US, the Marcellus in Pennsylvania and the Eagle Ford in South Texas.

FY 2011-12 represented a significant year of growth for the shale gas business, with significant investments in drilling, completions and facility installations. As a result of these efforts, gross production from all three JV reported an exit rate of 233 MMCFPD of gas and 34.7 MBPD of liquids in December'11 (a 7 fold increase on year-on-year basis).

RIL-SIBUR Joint Venture

RIL and SIBUR formed a joint venture called Reliance Sibur Elastomers Private Limited. The JV will be the first manufacturer of butyl rubber in India and with its targeted production of 100,000 tonnes of butyl rubber per annum, it will be the fourth largest producer globally. The JV will cater to the demand for synthetic rubber from the Indian automotive industry, which currently exceeds 75,000 tonnes per year and is being met through imports. Investment in the JV is in line with RIL's vision of emerging as a significant player in the global synthetic rubber market. RIL's share in the JV will total 74.9% while SIBUR will account for the rest. The JV will invest $450 million in setting up its facility, which is expected to be commissioned in mid-2014.

Reliance Retail Limited

Since inception, Reliance Retail has relentlessly worked towards building a services platform for supporting retail development and value creation. It has made significant investments to build back-end as well as front-end retail infrastructure and some of the key areas where the Company has built capabilities include, warehousing and logistics infrastructure, front-end infrastructure development, IT infrastructure and food and supply chain.

During FY 2011-12, Reliance Retail stressed on its back- end operations and store expansion capability by successfully adding more than 200 stores across value and specialty formats. Reliance Retail operates across its two formats - value format and speciality format. Reliance Retail's value format comprises Reliance Fresh, Reliance Super, Reliance Mart, Delight and Autozone, consisting of over 700 stores and contributed to dominant share of retail space and turnover. Speciality value format comprises Reliance Digital, Reliance Trends, Reliance Footprint and Reliance Timeout. Reliance Retail operates various partnerships in the lifestyle category and comprises Reliance Brands, Marks and Spencer, Vision Express and Office Depot.

Infotel Broadband

RIL has acquired 95% stake in the equity of Infotel Broadband Services Limited (Infotel) with the intention of creating a nation-wide network of next-generation wireless broadband services. Infotel was the only successful bidder in all of the 22 circles in the Broadband Wireless Access ('BWA') spectrum auction conducted by the Department of Telecommunications, Government of India. Reliance can now offer fourth generation wireless infocom services across the nation through the 20 Mhz, contiguous, pan-India spectrum secured through this acqusition.

Reliance Haryana SEZ Limited

The development activity of Model Economic Township (MET) in the district of Jhajjar Haryana has begun with some of the leading Japanese multinationals undertaking the development of their industrial units. The State Government has recommended the project to be declared as a node of the Delhi Mumbai Industrial Corridor which is under consideration by appropriate authorities. The MET has been envisioned to be developed as an industrial infrastructure to support economic growth through a Joint Venture between Reliance Ventures Limited (a Wholly Owned Subsidiary of the Company) and Infrastructure Leasing & Financial Services Limited (IL&FS) in a public private partnership framework with the Government of Haryana through HSIIDC Limited (a Government of Haryana company).

Acquisition of Stake in TV-18

During the year, companies effectively wholly owned by RIL, entered into binding agreement with TV18 Broadcast Limited (TV18) for divesting the investments in various ETV channels being operated and managed by Eenadu Group. Completion of this divestment is subject to receipt of regulatory approvals and completion of the proposed rights issue of TV18 and Network18 Media & Investments Limited ('Network18'), the holding company of TV18 and TV18.

Infotel, a subsidiary of RIL, has entered into a content license agreement with Network18 and TV18, under which Infotel shall have preferential access to (i) the content of all the media and web properties of Network 18 and its associates and (ii) programming and digital content of all the broadcasting channels of TV18 and its associates on a first right basis as a most preferred customer.

Consolidated Financial Statements In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

Subsidiaries

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies.

Details of major subsidiaries of the Company are covered in Management's Discussion and Analysis Report forming part of the Annual Report.

Directors

Shri M.L. Bhakta, Shri Hital R. Meswani, Prof. Dipak C. Jain and Shri P.M.S. Prasad, Directors, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting.

Directors-Responsibility Statement Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors-Responsibility Statement, it is hereby confirmed that :

(i) in the preparation of the annual accounts for the year ended March 31, 2012, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a 'going concern-basis.

Auditors and Auditors-Report

M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from all of them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act.

The Notes on Financial Statements referred to in the Auditors-Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Central Government has approved the appointment of the following cost auditors for conducting Cost Audit for the financial year 2011-12:

(i) For the textiles business - M/s. Kiran J. Mehta & Co, Cost Accountants;

(ii) For the chemicals business - Shri S. N. Bavadekar, Cost Accountant, M/s. V. J. Talati & Co., Cost Accountants, M/s. Diwanji & Associates, Cost Accountants, M/s. K. G. Goyal & Associates, Cost Accountants; M/s Bandyopadhyaya, Bhaumik & Co., Cost Accountants;

(iii) For the polyester business - Shri Suresh D. Shenoy, Cost Accountant, M/s. V. Kumar & Associates, Cost Accountants.

(iv) For Electricity Generation - Shri S.N. Bavadekar, Cost Accountant; and

(v) For Petroleum Business - Shri S.N. Bavadekar, Cost Accountant; M/s Kiran J. Mehta & Co., Cost Accountants; Shri Suresh D. Shenoy, Cost Accountant; M/s Bandyopadhyaya Bhaumik & Co., Cost Accountants; M/s Shome & Banerjee, Cost Accountants.

Secretarial Audit Report

As a measure of good corporate governance practice, the Board of Directors of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit. The Secretarial Audit Report for the financial year ended March 31, 2012, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Securities Contracts (Regulation) Act, 1956, Depositories Act, 1996, The Foreign Exchange Management Act, 1999 to the extent applicable to Overseas Direct Investment (ODI), Foreign Direct Investment (FDI) and External Commercial Borrowings (ECB) and all the Regulations and Guidelines of SEBI as applicable to the Company, including The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and The Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 and Listing Agreements with the Stock Exchanges.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors-Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure-II to this Report.

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Acknowledgement

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani

Chairman and Managing Director

April 20, 2012


Mar 31, 2011

The Directors are pleased to present the 37th Annual Report and the audited accounts for the financial year ended March 31, 2011.

Financial Results

The financial performance of the Company, for the year ended March 31, 2011 is summarised below:

2010-2011 2009-2010 Rs. crore $ Mn* Rs. crore $ Mn* Profit before Depreciation,

Interest & Tax 41,177.44 9,234 33,041.18 7,359

Less: Interest 2,327.62 522 1,997.21 445

Depreciation 16,241.33 13,477.01

Less: Transfer from

Revaluation Reserve 2,633.75 13,607.58 3,051 2,980.48 10,496.53 2,338

Profit before Tax 25,242.24 5,661 20,547.44 4,576

Less: Provision for Current Taxation 4,320.44 969 3,111.77 693

Provision for Deferred Tax 635.50 143 1,200.00 267

Profit after Tax 20,286.30 4,549 16,235.67 3,616

Add: Balance in Profit and Loss Account 4,999.45 1,114 5,384.19 1,199

Amount Available for Appropriation 25,285.75 5,663 21,619.86 4,815

Appropriation:

General Reserve 16,000.00 3,588 14,000.00 3,118

Debenture Redemption Reserve - - 189.50 42

Dividend on Equity Shares 2,384.99 535 2,084.67 464

Tax on Dividend 386.90 87 346.24 77

Balance carried to Balance Sheet 6,513.86 1,453 4,999.45 1,114

25,285.75 5,663 21,619.86 4,815

* 1 $ = Rs. 44.595 Exchange Rate as on March 31, 2011 (1 $ = Rs. 44.90 as on March 31, 2010)

Results of Operations

The first full year of operations, after commissioning of the Companys two large scale projects namely KG D6 and SEZ refinery at Jamnagar, resulted in a record performance during the financial year under review.

- Turnover increased by 29% to Rs. 2,58,651 crore ($ 58.0 billion)

- Exports increased by 33% to Rs. 1,46,667 crore ($ 32.9 billion)

- PBDIT increased by 25% and achieved a record level of Rs.41,178 crore ($ 9.2 billion)

- Profit Before Tax increased by 23% to Rs. 25,242 crore ($ 5.7 billion)

- Cash Profit increased by 24% to Rs. 34,530 crore ($ 7.7 billion)

- Net Profit increased by 25% to Rs. 20,286 crore ($ 4.5 billion)

- Gross Refining Margin at $ 8.4 /bbl for the year ended March 31, 2011

The Company is one of Indias largest contributors to the national exchequer primarily by way of payment of taxes and duties to various government agencies. During the year, a total of Rs. 28,719 crore ($ 6.4 billion) was paid in the form of various taxes and duties.

Dividend

Your Directors have recommended a dividend of Rs. 8/- per Equity Share (last year Rs. 7/- per Equity Share) for the financial year ended March 31, 2011, amounting to Rs. 2772 crore (inclusive of tax of Rs. 387 crore) one of the highest ever payout by any private sector domestic company. The dividend will be paid to members whose names appear in the Register of Members as on May 9, 2011; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners.

The dividend payout for the year under review has been formulated in accordance with the Companys policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals and the shareholders aspirations.

Credit Rating

The Company continues to have the highest domestic credit ratings of AAA from CRISIL and Fitch. Moodys and S&P have reaffirmed investment grade ratings for international debt of the Company, as Baa2 and BBB, respectively. Its continued Balance Sheet strengthning in financial year 2010-11, resulted in Moodys, Fitch and S&P recently upgrading their outlook for the Company from Stable to Positive. The Companys international rating from S&P is higher than the countrys sovereign rating. Strong credit ratings by leading international agencies reflect the Companys financial discipline and prudence.

Managements Discussion and Analysis Report

Managements Discussion and Analysis report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The Company has entered into various joint ventures, partnerships and contracts in the area of oil and gas, refining and petrochemicals businesses. While benefits from such contracts will accrue in future years, their progress is periodically monitored.

In line with its aspirations of ongoing growth, Reliance is investing its resources in core business across the

integrated energy chain. While doing so, the Company is also taking the initiative of investing in new technologies and businesses that help meet changing aspirations of millions of Indian consumers. These strategies and initiatives are aimed at ensuring that Reliance delivers long- term sustainable growth and creates unprecedented value for all its stakeholders.

Some of the major events of the year include the following:

- RIL-BP alliance:

RIL has entered into a strategic partnership with BP and signed the relationship framework and transactional agreements. The partnership across the full value chain comprises BP taking a 30% stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the producing KG-D6 block. The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India and will endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India. BP will pay an aggregate consideration of $ 7.2 billion for the interests to be acquired in the 23 production sharing contracts. Future performance payments of up to $ 1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

- Shale gas joint ventures:

During the year, the Company, through its subsidiaries, in the United States of America entered into three distinctive joint venture agreements with Atlas Energy, Pioneer Natural Resources and Carrizo Oil & Gas and acquired 40%, 45% and 60% interests, respectively in the shale gas acreage positions to be explored by these joint ventures. The net Shale acreage acquisition by Reliance is 3,12,430 acres. It also entered in to a separate joint venture with Pioneer Natural Resources aimed at addressing the mid-stream opportunity in gas evacuation and transportation.

- Joint venture for Butyl Rubber production in India:

During the year, RIL and Russias SIBUR announced a joint venture for the setting up of a facility for producing 100,000 MT butyl rubber in India. This is a significant step towards Reliances commitment to service Indias growing automotive sector by bringing in complex technologies, available with only a very few companies globally. The setting up of domestic manufacturing of butyl rubber which is expected to be commissioned by 2013, will fulfill a longstanding demand of the Indian tyre and rubber industry.

- Spearheading the knowledge revolution:

During the year, RIL acquired a substantial stake in

Infotel Broadband Services Limited (Infotel Broadband), which emerged as a successful bidder in all the 22 circles of the auction for Broadband Wireless Access (BWA) Spectrum conducted by the Department of Telecommunications (DoT). RIL owns 95% of the equity share capital of Infotel Broadband.

RIL sees the broadband opportunity as a new frontier of knowledge economy in which it is confident of taking leadership position and providing India with an opportunity to be in the forefront among the countries providing world-class 4G network and services.

Others:

The Honorable Supreme Court of India delivered its judgment in the Reliance Natural Resources Limited (RNRL) - RIL dispute. The judgment recognized the dominant role of the provisions of the Production Sharing Contract and upheld the policies formulated by the Government under which it has the authority to regulate the production and distribution of natural gas. RIL and RNRL signed a Gas Supply Master Agreement in compliance with the Gas Utilization Policy and EGoM decisions. RIL and Reliance ADA Group companies approved and signed an agreement canceling all existing non-compete arrangements entered into between the two groups pursuant to the scheme of reorganization of the Reliance Group and entered into a new simpler, non-compete agreement with respect to gas based power generation.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

Subsidiaries

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies.

Details of major subsidiaries of the Company are covered in Managements Discussion and Analysis Report forming part of the Annual Report.

Directors

Shri Ramaniklal H. Ambani, Shri Nikhil R. Meswani, Prof. Ashok Misra and Shri Yogendra P. Trivedi, Directors, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting.

Group

Pursuant to intimation from the Promoters, the names of the Promoters and entities comprising the group are disclosed in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that :

(i) in the preparation of the annual accounts for the year ended March 31, 2011, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a going concern basis.

Auditors and Auditors Report

M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from all of them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the

Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Auditors Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Central Government has approved the appointment of the following cost auditors for conducting Cost Audit for the financial year 2010-11 –

(i) For the textiles business - M/s. Kiran J. Mehta & Co, Cost Accountant;

(ii) For the chemicals business – Shri S. N. Bavadekar,

Cost Accountant, M/s. V. J. Talati & Co., Cost

Accountants, M/s. Diwanji & Associates, Cost

Accountants, M/s. K. G. Goyal & Associates, Cost Accountants; and

(iii) For the polyester business – Shri Suresh D. Shenoy,

Cost Accountant, M/s. V. Kumar & Associates, Cost Accountants.

Secretarial Audit Report

As a measure of good corporate governance practice, the Board of Directors of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit of records and documents of the Company. The Secretarial Audit Report for the financial year ended March 31, 2011, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreements with the Stock Exchanges, Securities Contracts (Regulation) Act, 1956 and all the Regulations and Guidelines of SEBI as applicable to the Company, including the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 and the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure-I to this Report.

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, dividends, interest on debentures and matured debentures which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Acknowledgement

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani

Chairman and Managing Director

April 21, 2011


Mar 31, 2010

The Directors are pleased to present the 36th Annual Report and the audited accounts for the financial year ended March 31, 2010.

Financial Results

The financial performance of the Company, for the year ended March 31, 2010 is summarised below:

2009-2010 2008-2009

Rs. crore $ Mn* Rs. crore $ Mn*

Profit before Depreciation,

Interest & Tax 33,041.18 7,359 25,373.75 5,003

Less: Interest 1,997.21 445 1,745.23 344

Depreciation 13,477.01 7,182.43

Less: Transfer from Revaluation 2,980.48 1,987.14

Reserve 10,496.53 2,338 5,195.29 1,025

Profit before Tax 20,547.44 4,576 18,433.23 3,634

Less: Provision for Current Taxation 3,111.7 693 1,206.50 238

Provision for Fringe Benefit Tax - - 56.87 11

Provision for Deferred Tax 1,200.00 267 1860.54 367

Profit after Tax 16,235.67 3,616 15,309.32 3,018

Add: Balance in Profit and Loss Account 5,384.19 1,199 4,363.29 861

Amount Available for Appropriation 21,619.86 4,815 19,672.61 3,879 Appropriations: General Reserve 14,000.00 3,118 11,728.92 2,312

Debenture Redemption Reserve 189.50 42 340.05 67

Dividend on Equity Shares 2,084.67 464 1,897.05 374

Tax on dividend 346.24 77 322.40 64

Balance carried to Balance Sheet 4,999.45 1,114 5,384.19 1,062

21,619.86 4,815 19,672.61 3,879

* 1 $ = Rs. 44.90 Exchange Rate as on March 31, 2010 (1 $ = Rs 50.72 as on March 31, 2009)

Results of Operations

The year under review was a transformational year for the Company. The Company has set new global benchmarks for project execution. This was a landmark year for the Company for its operating performance with earnings growth amidst extraordinary challenges of price volatility and demand reduction.

During the year, the Company has scaled new heights and set several new benchmarks in terms of sales, profits, networth and assets. Turnover for the year was Rs. 2,00,400 crore ( $ 44.6 billion) against Rs. 1,46,328 crore in the previous year. Exports were higher by 24 % at Rs. 1,10,176 crore ($ 24.5 billion).

Profit after tax for the year was Rs. 16,236 crore ($ 3.6 billion) as against Rs. 15,309 crore ($ 3.1 billion).

The Company is one of Indias largest contributors to the national exchequer primarily by way of payment of taxes and duties to various government agencies. During the year, a total of Rs. 17,972 crore ($ 4.0 billion) was paid in the form of various taxes and duties

Dividend

Your Directors have recommended a dividend of Rs. 7/- per Equity Share (last year Rs. 13/- per Equity Share on pre bonus share capital) for the financial year ended March 31, 2010, amounting to Rs. 2,430 crore (inclusive of tax of Rs. 346 crore) one of the highest ever payout by any private sector domestic company. The dividend will be paid to members whose names appear in the Register of Members as on May 11, 2010; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners.

The dividend payout for the year under review has been formulated in accordance with the Company’s policy to pay sustainable dividend linked to long term performance, keeping in view the Company’s need for capital for its growth plans and the intent to finance such plans through internal accruals to the maximum.

Credit Rating

The Company continues to have the highest domestic credit ratings of AAA from CRISIL and Fitch. Moody’s and S&P have reaffirmed investment grade ratings for international debt of the Company, as Baa2 and BBB, respectively. The Company’s international rating from S&P is higher than the country’s sovereign rating. Strong credit ratings by leading international agencies reflect the Company’s financial discipline and prudence.

Employees Stock Option Scheme

The Company implemented the Employees Stock Option Scheme (‘‘Scheme’’) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the SEBI Guidelines). The Employees Stock Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the Scheme.

The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2010 (cumulative position) are given below:

a. 1Options Granted 2,98,13,100 (Pre Bonus) 5,96,26,200 (Post Bonus)

b. 1Exercise Price

Pre Bonus Post Bonus

Option Exercise Option Exercise Granted Price Granted Price

2,87,28,000 1284* 5,74,56,000 642*

27,000 1684* 54,000 842*

10,08,000 2292* 20,16,000 1146*

50,100 1289* 1,00,200 644.5*

* Plus applicable taxes, as per law

1In view of issue of Bonus shares in the ratio of one share for every one share held as on record date, the number of Options has been doubled and Exercise Price halved.

c. Options Vested 56,88,200

d. Options Exercised 10,71,912

e. The total number of shares arising as a 10,71,912 result of exercise of Options

f. Options Lapsed 85,94,874

g. Variation in terms of Options : Subject to the conditions under the Scheme, the vesting schedule from April 2009 onwards has been deferred by one year, save and except the options due for deceased employees.

h. Money realised by exercise 68,81,67,504 of Options

i. Total number of Options in force 499,59,414 [(a) - (d) - (f)]

j. Employee wise details of Options granted (Post Bonus) to:

i. Senior managerial personnel

1. Shri Nikhil R.Meswani 14,00,000

2. Shri Hital R. Meswani 14,00,000

3. Shri Hardev Singh Kohli 1,00,000

4. Shri P.M.S. Prasad 10,00,000

ii. Any other employee who received a grant in any one year of Options amounting to 5% or more of Options granted during that year Nil

iii. Identified employees, who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil

m. Diluted Earnings Per Share (EPS) before exceptional items pursuant to issue of shares on exercise of Options calculated in accordance with Accounting Standard (AS) 20 Earnings Per Share Rs. 49.65

The issuance of equity shares pursuant to exercise of Options does not affect the profit and loss account of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable,

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

Management’s Discussion and Analysis Report

Management’s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The Company has entered into various contracts in the area of oil and gas, refining and petrochemicals businesses. While benefits from such contracts will accrue in future years, their progress is periodically monitored.

Some of the major events of the year include the following :

KG D6 completed 365 days of 100% uptime and zero- incident production. Gas production from KG D6 has ramped up to 60 MMSCMD in a short span of 9 months from commencement. KG D6 has current production of about 60 MMSCMD. The design capacity of the KG D6 deepwater gas production facilities were assessed and achieved a flow rate of 80 MMSCM.

GSPAs have been executed in line with the Government of Indias gas utilization policy for over 69 MMSCMD in the fertilizers, power, city gas distribution, steel, LPG, refinery and petrochemical sectors.

During the year, development of Panna-K (PK) area was completed.

The Company had made four new gas discoveries during the year,

- Dhirubhai-43 in Well AA1 in CB10 block

- Dhirubhai-44 in Well R1 in KGVD3 block

- Dhirubhai-45 in Well BF1 in CB10 block

- Dhirubhai-46 in Well AH1 in CB10 block

Subsequent to series of new discoveries in the southern and deeper areas of the KG D6 block, an optimized development plan has been submitted to DGH in December 2009.

Major events after the end of the financial year till the date of this report are as under.

- The Company entered into a joint venture with USA based Atlas Energy, Inc. (Atlas) under which the Company acquired 40% interest in Atlass core Marcellus Shale acreage position.

- The Company has become a partner in approximately 300,000 net acres of undeveloped leasehold in the core area of the Marcellus Shale in southwestern Pennsylvania for an acquisition cost of US$ 339 million and an additional US$ 1.36 billion capital costs under a carry arrangement for 75% of Atlass capital costs over an anticipated seven and a half year development program. While Atlas will serve as the development operator, Reliance is expected to begin acting as development operator in certain regions in the coming years as part of the joint venture.

- Atlas will continue acquiring leasehold in the Marcellus shale region and the Company will have the option to acquire 40% share in all new acreages. The Company has also obtained the right of first offer with respect to potential future sales by Atlas of around 280,000 additional Appalachian acres currently controlled by Atlas (not included in the present joint venture).

The Honble Supreme Court of India has delivered its judgment in the RNRL-RIL legal dispute. The judgment recognized the dominant role of the provisions of the Production Sharing Contract and has upheld the policies formulated by the Government under which it has the authority to regulate the production and distribution of natural gas.

In view of the findings of the judgment, the Company can sell gas only at the price approved by the Government and only to the entities who have been allocated gas under the Gas Utilisation Policy. RIL has no ability to deviate from price, quantity and tenure as determined under Government’s policies, or to discriminate amongst various consumers.

The judgment of the Hon’ble Supreme Court has set at rest numerous issues which had been raised in relation to the gas discovered and produced by the Company.

Subsidiaries

Ministry of Corporate Affairs, Government of India has granted approval that the requirement to attach various documents in respect of subsidiary companies, as set out in sub-section (1) of Section 212 of the Companies Act, 1956, shall not apply to the Company. Accordingly, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. Financial information of the subsidiary companies, as required by the said approval, is disclosed in the Annual Report. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

Details of major subsidiaries of the Company are covered in Management’s Discussion and Analysis Report forming part of the Annual Report.

Directors

Shri Pawan Kumar Kapil was appointed as an additional Director effective May 16, 2010. He was also appointed as wholetime director designated as Executive Director for three years. In terms of Section 260 of the Companies Act, 1956 he shall hold office only upto the date of the ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing his candidature for the office of Director liable to retire by rotation.

Shri Hital R. Meswani, Shri Mahesh P. Modi, Dr. Dharam Vir Kapur, Dr. Raghunath A. Mashalkar, Directors, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting.

Your Directors express their profound grief on the unexpected sudden demise of Shri R. Ravimohan on December 28, 2009.

Shri H. S. Kohli, Director has resigned from the Board effective May 16, 2010.

The Board placed on record its deep sense of appreciation for the invaluable contribution made by Shri H. S. Kohli and Shri R. Ravimohan during their tenure as wholetime directors of the Company.

Group

Pursuant to intimation from the Promoters, the names of the Promoters and entities comprising ‘group’ are disclosed in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Directors’ Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, it is hereby confirmed that :

(i) in the preparation of the annual accounts for the year ended March 31, 2010, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a ‘going concern’ basis.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

Auditors and Auditors’ Report

M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from all of them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Auditors’ Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Central Government had directed an audit of the cost accounts maintained by the Company in respect of textiles, polyester and chemicals businesses. For conducting the cost audit for these businesses for the financial year ended March 31, 2010, the Central Government has approved the appointment of the following cost auditors –

(i) For the textiles business - Shri S. N. Bavadekar, Cost Accountant;

(ii) For the chemicals business – Shri S. N. Bavadekar, Cost Accountant, M/s. V. J. Talati & Co., Cost Accountants, M/s. Diwanji & Associates, Cost Accountants, M/s. K. G. Goyal & Associates, Cost Accountants, Shri Suresh D. Shenoy, Cost Accountant, M/s. Kiran J. Mehta & Co., Cost Accountants; and

(iii) For the polyester business – Shri S. N. Bavadekar, Cost Accountant, M/s. V. J. Talati & Co., Cost Accountants, M/s. K. G. Goyal & Associates, Cost Accountants, M/s. V. Kumar & Associates, Cost Accountants.

Secretarial Audit Report

As a measure of good corporate governance practice, the Board of Directors of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended March 31, 2010, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreements with the Stock Exchanges, Securities Contracts (Regulation) Act, 1956 and all the Regulations and Guidelines of SEBI as applicable to the Company, including the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors’ Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure-I to this Report.

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, dividends, interest on debentures and matured debentures which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally.

With a view to strengthening the Corporate Governance framework, the Ministry of Corporate Affairs has incorporated certain provisions in the Companies Bill 2009. The Ministry has issued a set of voluntary guidelines in the second half of December 2009 for adoption by the companies. The Guidelines broadly outline conditions for appointment of directors (including independent directors), guiding principles to remunerate directors, responsibilities of the Board, risk management, the enhanced role of Audit Committee, rotation of audit partners and firms and conduct of secretarial audit. Your Company while already complying by and large with these various requirements has already initiated appropriate action for compliance.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Acknowledgement

Your Directors would like to express their appreciation for assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani

Chairman & Managing Director May 12, 2010


Mar 31, 2009

The Directors are pleased to present the 35th Annual Report and the audited accounts for the financial year ended March 31, 2009.

Amalgamation of Reliance Petroleum Limited with the Company

Reliance Petroleum Limited (RPL) has been amalgamated with the Company. The Scheme of Amalgamation was sanctioned by the Honble High Court of Judicature at Bombay vide Order dated June 29, 2009 and by the Honble High Court of Gujarat at Ahmedabad vide Order dated July 29, 2009 received on September 10, 2009. The Scheme became effective on September 11, 2009, the Appointed Date of the Scheme being April 1, 2008.

The amalgamation follows the Companys philosophy of creating enduring value for all its stakeholders. The amalgamation creates a platform for value-enhancing growth and reinforces the Companys position as an integrated global energy Company. Through this amalgamation, the Company consolidates a world-class, complex refinery complementing the Companys product range. With this amalgamation, the Company is now having the most complex and largest refining facility at single location in the world and will have a combined capacity of 1.24 MBPD and also be a supplier of clean fuels to all global markets.

Financial Results

The assets and liabilities of RPL and its operating results have been incorporated in the Companys books with effect from April 1, 2008 (Appointed Date). The financial performance of the Company, for the year ended March 31, 2009 is summarised below:

2008-2009 2007-2008 Rs. crore $ Mn* Rs. crore $ Mn*

Profit before Depreciation,

Interest & Tax 25,373.75 5,003 28,934.64 7,212

Less: Interest 1,745.23 344 1,077.36 269

Depreciation 7,182.43 6,627.85

Less: Transfer from Revaluation 1,987.14 1,780.71

Reserve 5,195.29 1,025 4,847.14 1,208

Profit before Tax 18,433.23 3,634 23,010.14 5,735

Less: Provision for Current Taxation 1,206.50 238 2,604.96 649 Provision for

Fringe Benefit Tax 56.87 11 47.00 12 Provision for Deferred Tax 1860.54 367 899.89 224

Profit after Tax 15,309.32 3,018 19,458.29 4,850

Add:Balance in Profit and Loss Account 4,363.29 861 2,765.37 689 Excess provision for tax for earlier years - - 48.10 12 Amount Available for Appropriation 19,672.61 3,879 22,271.76 5,551 Appropriations:

General Reserve 11,728.92 2,312 16,000.00 3,988

Debenture Redemption Reserve 340.05 67 --

Dividend on Equity Shares 1,897.05 374 1,631.24 406

Tax on dividend 322.40 64 277.23 69

Balance carried to Balance Sheet 5,384.19 1,062 4,363.29 1,088

19,672.61 3,879 22,271.76 5,551

* 1 $ = Rs. 50.72 Exchange Rate as on March 31, 2009 (1 $ = Rs 40.12 as on March 31, 2008)

(Financial results for the year 2008-09 include figures of RPL and therefore to that extent are not comparable with the figures for 2007-08)

Results of Operations

The year under review was a transformational year for the Company. The Company has set new global benchmarks for project execution. This was a landmark year for the Company for its operating performance with earnings growth amidst extraordinary challenges of price volatility and demand reduction.

During the year, the Company has scaled new heights and set several new benchmarks in terms of sales, profits, networth and assets. Turnover for the year was Rs. 1,46,328 crore ($ 28.9 billion) against Rs. 1,39,269 crore in the previous year. Exports were higher by 7% at Rs. 89,199 crore ($17.6 billion).

Profit after tax for the year (excluding exceptional items) was Rs. 15,637 crore ($ 3.1 billion) as against Rs.15,261 crore ($ 3.8 billion).

The Company is one of Indias largest contributors to the national exchequer primarily by way of payment of taxes and duties to various government agencies. During the year, a total of Rs. 11,574 crore ($ 2.3 billion) was paid in the form of various taxes and duties.

Dividend and Bonus

Your Directors have declared a dividend (interim) of Rs. 13/- per equity share (last year Rs. 13/- per equity share) for the financial year ended March 31, 2009, amounting to Rs. 2,219 crore (inclusive of tax of Rs. 322 crore) one of the highest ever payout by the Company. The shareholders of the erstwhile RPL shall also be eligible to receive the dividend.

The Board of Directors has considered the interim dividend declared as the final dividend for the financial year ended March 31, 2009.

Your Directors have recommended issue of bonus shares in the ratio of one fully paid equity share for every one fully paid equity share held in the Company. The bonus shares will also accrue to the shareholders of the erstwhile RPL, since amalgamated with the Company.

The proposal for bonus continues Reliance’s tradition of rewarding shareholders at the end of a value creation cycle. The dividend pay out and recommended bonus have been formulated keeping in view the Company’s need for capital for its growth plans, the intent to finance such plans through internal accruals to the maximum and the ability to serve the enhanced capital.

The issue of bonus shares shall be subject to the shareholders’ approval at the ensuing Annual General Meeting. On approval by the shareholders, bonus shares shall be issued to those who are members of the Company as on the record date to be fixed by its Board.

Credit Rating

The Company continues to have the highest domestic credit ratings of AAA from CRISIL and Fitch. Moodys and S&P have reaffirmed investment grade ratings for international debt of the Company, as Baa2 and BBB, respectively. The Companys international rating from S&P is higher than the countrys sovereign rating. Strong credit ratings by leading international agencies reflect the Company’s financial discipline and prudence.

Employees Stock Option Scheme

Employees Stock Option Scheme was approved and implemented by the Company and Options were granted to employees in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the SEBI Guidelines). The Employees Stock Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the Scheme.

The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2009 (cumulative position) are given below:

a. Options Granted 29,813,100

b. Exercise Price

Options granted Exercise Price

2,87,28,000 1,284*

27,000 1,684* 10,08,000 2,292*

50,100 1,289*

* Plus applicable taxes, as may be levied on the Company

c. Options Vested 21,55,070

d. Options Exercised 1,49,632

e. The total number of shares arising as a result of exercise of Options 1,49,632

f. Options Lapsed 29,76,740

g. Variation in terms of Options Nil

h. Money realised by exercise of Options Rs. 23,19,29,600

i. Total number of Options in force [(a) - (d) - (f)]

2,66,86,728

j. Employee wise details of Options granted to: i. Senior managerial personnel

1. Shri Nikhil R.Meswani 7,00,000

2. Shri Hital R. Meswani 7,00,000

3. Shri Hardev Singh Kohli 50,000

ii. Any other employee who received a grant in any one year of Options amounting to 5% or more of Options granted during that year Nil

iii. Identified employees, who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil

k. Diluted Earnings Per Share (EPS) before exceptional items pursuant to issue of shares on exercise of Options calculated in accordance with Accounting Standard (AS) 20 Earnings Per Share Rs. 98.83

As the exercise is made at the market price prevailing as on the date of the grant plus applicable taxes as may be levied on the Company, the issuance of equity shares pursuant to exercise of Options does not affect the profit and loss account of the Company.

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed at the Annual General Meeting held on June 27, 2006. The Certificate would be placed at the Annual General Meeting for inspection by members.

Managements Discussion and Analysis Report

Managements Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The Company has entered into various contracts in the areas of oil & gas, refining and petrochemicals businesses. While benefits from such contracts will accrue in the future years, their progress is periodically monitored. Some of the major events of the year include the following:

- The Company made two gas discoveries during the year as follows:

Well B1 in the KG-V-D3 Block Well L1 in the KG-D6 Block

The appraisal of the southern area of KG-D6 is underway targeting the extension of the channel levee fan complex system within the tertiary sequences i.e. Pleistocene, Pliocene and Miocene. Interpretation of 3D seismic data during the year has led to identification of new prospects in this area.

- The consolidation of RPLs refining assets with RILs existing refining business gives RIL a capacity of 1.24 MBPD. What sets RIL apart in the context of global refining is the complexity of its refineries. The two Jamnagar refineries that RIL will operate are not only among the largest in the world, but also the most complex, with an average complexity of more than 12.0 on the Nelson index. Following the amalgamation, RIL will own 25% of the worlds most complex refining capacity. RIL will also become the worlds largest producer of ultra-clean fuels at a single location.

RIL has signed gas contracts that are in line with the Gas Utilisation Policy of the Government of India.

Accordingly, standard gas contracts have been signed for a 5-year period at $ 4.2 /MMBTU with companies in fertiliser, power and the sponge iron sectors. Gas production has already reached 5 billion cubic meters from this block.

Some of the major events after the end of the year till the date of this report include the following -

RIL has commenced gas production from KG-D6 block (D1 / D3 discoveries) in a record time of six and half years, as against the world average of 9-10 years for similar deep water facilities. KG-D6 is amongst the five largest deep water gas projects globally.

- In a short span of less than 6 months, total gas production from KG-D6 has ramped up to nearly 40 MMSCMD. This is one of the fastest ramp-up in gas production amongst the deep water gas fields world- wide.

. The litigation in respect of gas supply from KG-D6 basin where the Company is a contractor under a production sharing contract (PSC) is now pending before the Honble Supreme Court.

. All key processing units, including the Fluidised Catalytic Cracking Unit (FCCU), Vacuum Gas Oil (VGO), Hydrogen Manufacturing Unit (HMU), Diesel Hydro De-Sulphurisation (DHDS), Propylene Recovery Unit (PRU), Coker unit and the Polypropylene complex are operating close to their respective design capacities. All the support units and utilities are fully operational and presently the refinery is operating at its design capacity.

Subsidiaries

Ministry of Corporate Affairs, Government of India has granted approval that the requirement to attach various documents in respect of subsidiary companies, as set out in sub-section (1) of Section 212 of the Companies Act, 1956, shall not apply to the Company. Accordingly, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. Financial information of the subsidiary companies, as required by the said approval, is disclosed in the Annual Report. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

Details of major subsidiaries of the Company are covered in Management’s Discussion and Analysis Report forming part of the Annual Report.

Directors

Shri PMS Prasad and Shri R Ravimohan were appointed as additional directors with effect from August 21, 2009. They were also appointed as wholetime directors designated as Executive Directors for five years. In terms of Section 260 of the Companies Act, 1956 they shall hold the office only upto the date of the ensuing Annual General Meeting. The Company has received requisite notices in writing from members proposing their candidature for the office of Director liable to retire by rotation.

Shri H S Kohli, Shri Y P Trivedi, Prof. Dipak C Jain, Shri M L Bhakta, Directors, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting.

Shri S. Venkitaramanan, an independent director, resigned from the Board w.e.f. July 24, 2009. The Board placed on record its deep sense of appreciation for the guidance and invaluable contribution made by Shri S. Venkitaramanan during his tenure as a director of the Company.

Group

Pursuant to intimation from the Promoters, the names of the Promoters and entities comprising ‘group’ are disclosed in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Directors’ Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, it is hereby confirmed that :

(i) in the preparation of the annual accounts for the year ended March 31, 2009, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2009 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a ‘going concern’ basis.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

Auditors and Auditors’ Report

M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from all of them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Auditors’ Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Central Government had directed an audit of the cost accounts maintained by the Company in respect of textiles, polyester and chemicals businesses. For conducting the cost audit for these businesses for the financial year ended March 31, 2009, the Central Government has approved the appointment of the following cost auditors

(i) For the textiles business - Shri S. N. Bavadekar, Cost Accountant;

(ii) For the chemicals business – Shri S. N. Bavadekar, Cost Accountant, M/s. V. J. Talati & Co., Cost Accountants, M/s. Diwanji & Associates, Cost Accountants, M/s. K. G. Goyal & Associates, Cost Accountants, Shri Suresh D. Shenoy, Cost Accountant, M/s. Kiran J. Mehta & Co., Cost Accountants; and

(iii) For the polyester business – Shri S. N. Bavadekar, Cost Accountant, M/s. V. J. Talati & Co., Cost Accountants, M/s. K. G. Goyal & Associates, Cost Accountants, Shri R. C. Srivastava, Cost Accountant, M/s. V. Kumar & Associates, Cost Accountants.

Secretarial Audit Report

As a measure of good corporate governance practice, the Board of Directors of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended March 31, 2009, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreements with the Stock Exchanges, Securities Contracts (Regulation) Act, 1956 and all the Regulations and Guidelines of SEBI as applicable to the Company, including the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors’ Report.

However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure-I to this Report.

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, dividends, interest on debentures and matured debentures which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance. The Directors adhere to the Corporate Governance requirements set out by the Securities and Exchange Board of India and have implemented all the stipulations prescribed. The Company has also implemented several best corporate governance practices as prevalent globally.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company, M/s. Chaturvedi & Shah, M/s. Deloitte Haskins & Sells and M/s. Rajendra & Co., confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Acknowledgement

Your Directors would like to express their appreciation for assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani

Chairman & Managing Director October 7, 2009


Mar 31, 2008

The Directors are pleased to present the 34th Annual Report and the audited accounts for the financial year ended March 31, 2008.

Financial Results

The financial performance of the Company for the financial year ended March 31, 2008 is summarised below:

2007-2008 2006-2007 Rs. crore $ Mn* Rs. crore $ Mn*

Profit before Depreciation, Interest & Tax 28,934.64 7,212 20,524.51 4,722 Less: Interest 1,077.36 269 1,188.89 274 Depreciation 6,627.85 6,812.16 Less: Transfer from Revaluation 1,780.71 1,997.01 Reserve 4,847.14 1,208 4,815.15 1,108 Profit before Tax 23,010.14 5,735 14,520.47 3,340 Less: Provision for Current Taxation 2,604.96 649 1,617.10 372 Provision for Fringe Benefit Tax 47.00 12 40.34 9 Provision for Deferred Tax 899.89 224 919.63 212 Profit after Tax 19,458.29 4,850 11,943.40 2,747 Add: Balance in Profit and Loss Account 2,765.37 689 3,029.09 697 Excess provision for tax for earlier years 48.10 12 0.51 - Amount Available for Appropriation 22,271.76 5,551 14,973.00 3,444 Appropriations: General Reserve 16,000.00 3,988 10,565.17 2,430 Dividend on Equity Shares 1,631.24 406 1,440.44 331 Tax on dividend 277.23 69 202.02 47 Balance carried to Balance Sheet 4,363.29 1,088 2,765.37 636 22,271.76 5,551 14,973.00 3,444

* 1 $ = Rs 40.12 Exchange Rate as on March 31, 2008 (1 $ = Rs 43.47 as on March 31, 2007)

Results of Operations

During the year, the Company has scaled new heights and set several new benchmarks in terms of sales, profits, networth and assets. This was a landmark year for the Company as it delivered record financial and operating performance amidst challenging and volatile market conditions. Turnover for the year was Rs. 1,39,269 crore ($ 34.7 billion) against Rs. 1,18,354 crore ($ 27.2 billion) in the previous year, reflecting a growth of 18%. During the year, exports were higher by 25% at Rs.83,492 crore ($ 20.8 billion).

Profit after tax, including exceptional item, for the year was Rs.19,458 crore ($ 4.9 billion) as against Rs.11,943 ($ 2.7 billion) crore for the previous year, registering an increase of 63%. Profit after tax, excluding exceptional item was Rs. 15,261 crore ($ 3.8 billion), representing an increase of 28% and the Compounded Annual Growth Rate (CAGR) of 30% over the past five years.

Exceptional item of Rs. 4,733 crore ($ 1.2 billion) represents gains primarily arising out of transactions concerning shares of Reliance Petroleum Limited, a subsidiary of the Company.

The Company is one of India’s largest contributors to the national exchequer primarily by way of payment of taxes and duties to various government agencies. During the year, a total of Rs.13,696 crore ($ 3.4 billion) was paid in the form of various taxes and duties.

Dividend

Your Directors have recommended a dividend of Rs. 13/- per Equity Share (last year Rs. 11/- per Equity Share) for the financial year ended March 31, 2008, amounting to Rs.1,631 crore - the highest ever payout by any private sector company in India. The dividend will be paid to members whose names appear in the Register of Members as on May 9, 2008; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners as on that date.

The dividend pay out for the year under review has been formulated in accordance with the Company’s policy to pay sustainable dividend linked to long term performance, keeping in view the Company’s need for capital for its growth plans and the intent to finance such plans through internal accruals to the maximum.

Credit Rating

The Company has the highest domestic credit ratings of AAA from CRISIL and Fitch. Moody’s and S&P have reaffirmed investment grade ratings for international debt of the Company, as Baa2 and BBB, respectively. The Company’s international rating from S&P is higher than the country’s sovereign rating.

Employees Stock Option Scheme

Members’ approval was obtained at the Annual General Meeting held on June 27, 2006 for introduction of Employees Stock Option Scheme.

Employees Stock Option Scheme was approved and implemented by the Company and Options were granted to employees in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (‘the SEBI Guidelines’). The Employees Stock Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the Scheme.

The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2008 are given below:

a. Options Granted 29,763,000 b. Exercise Price Options granted Exercise Price

28,728,000 1,284* 27,000 1,684* 1,008,000 2,292*

* Plus applicable taxes, as may be levied on the Company

c. Options Vested Nil d. Options Exercised Nil e. The total number of shares arising as a result of exercise of Options Nil f. Options Lapsed 1,711,600 g. Variation in terms of Options Nil h. Money realised by exercise of Options Nil i. Total number of Options in force 28,051,400 j. Employee wise details of Options granted to: i. Senior Management Personnel

1. Shri Nikhil R.Meswani 7,00,000 2. Shri Hital R. Meswani 7,00,000 3. Shri Hardev Singh Kohli 50,000

ii. Any other employee who received a grant in any one year of Options amounting to 5% or more of Options granted during that year Nil

iii. Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil

k. Diluted Earnings Per Share (EPS) before exceptional items pursuant to issue of shares on exercise of Options calculated in accordance with Accounting Standard (AS) 20 ‘Earnings Per Share’ Rs. 104.98

As the exercise would be made at the market price prevailing as on the date of the grant plus applicable taxes as may be levied on the Company, the issuance of equity shares pursuant to exercise of Options will not affect the profit and loss account of the Company.

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed at the Annual General Meeting held on June 27, 2006. The Certificate would be placed at the Annual General Meeting for inspection by members.

Management’s Discussion and Analysis Report

Management’s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The Company has entered into various contracts in the areas of oil & gas, refining and petrochemicals businesses. While benefits from such contracts will accrue in the future years, their progress is periodically monitored.

Additionally, some of the major events of the year include the following:

- During the year the Company’s Oil and Gas Exploration & Production business made significant offshore discoveries in the east and west coast of India. RIL surpassed its previous record and had 9 discoveries. Three gas discoveries were made in the Krishna basin in deep water (KG-D6-R1, KG-V-D3-A1 & B1). Two more gas discoveries were made in the Krishna basin in shallow water (KG-III-05-P1 & J1). A deep water discovery was made in the Cauvery basin (CY-D5-A1) yielding both oil and gas. An oil discovery was made in the deep waters of the prolific Krishna basin (KG-D4-MD1). One gas discovery each was made in the shallow waters of the Gujarat-Saurashtra basin (GS-01-B1) and Mahanadi basin (NEC-25-J1). In order to assess their commerciality, appraisal process is underway. The development plan for MA field (Dhirubhai-26) has been approved by the Management Committee. The development plan for Sohagpur Coal Bed Methane blocks (East and West) approved by the DGH.

- During the year, the Company signed an agreement to acquire certain polyester (capacity) assets of Hualon, Malaysia. It is a leading polyester producer in Malaysia with a capacity of half a million tonnes per annum along with downstream textile manufacturing capabilities spread over two locations in Malaysia, namely Nilai and Malacca. This acquisition was the second international acquisition in the polyester sector after the Company acquired Trevira in Europe. This acquisition will help the Company consolidate its position as the world’s largest polyester manufacturer with an annual capacity of 2.5 million tonnes, which represents an increase of 25% over its existing capacity. With this acquisition, Reliance’s global market share in polyester fibre and yarn will exceed 7%.

- In the Refining & Marketing business, the Company took over majority control of Gulf Africa Petroleum Corporation (GAPCO) and started shipping products to the East African markets. GAPCO owns and operates large storage terminal facilities and a retail distribution network in countries like Tanzania, Uganda and Kenya. It owns and operates large coastal storage terminals in Dar es Salaam (Tanzania), Mombassa (Kenya), and Kampala (Uganda). It has other well- spread depots in East and Central Africa and operates nearly 250 retail outlets.

- The Company also signed MoU with GAIL (India) Limited to explore opportunities of setting up petrochemical plants in feedstock rich countries outside India.

Subsidiaries

Ministry of Corporate Affairs, Government of India, vide order No. 47/108/2008-CL-III dated April 16, 2008 has granted approval that the requirement to attach various documents in respect of subsidiary companies, as set out in sub-section (1) of Section 212 of the Companies Act, 1956, shall not apply to the Company. Accordingly, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. Financial information of the subsidiary companies, as required by the said order, is disclosed in the Annual Report. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection by any investor at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

Reliance Petroleum Limited (RPL), a listed subsidiary of the Company, has set a rapid pace on all fronts in the implementation of a world-class, complex greenfield refinery at Jamnagar in Gujarat. The project has made rapid strides during the year and achieved overall progress of 90%. Based on the progress made so far, RPL expects to complete the refinery project ahead of its initial schedule of December, 2008. During the year, the Company sold 20.80 crore equity shares, representing 4.62% of the equity share capital of RPL out of its holding of 75%. After this sale, the shareholding of the Company in RPL stands at 70.38%. The sale of shares monetized only a small portion of the Company’s holding in RPL and helped to broadbase the shareholding of RPL, besides unlocking value for the Company’s shareholders.

Reliance Retail Limited (RRL), another subsidiary of the Company, launched its first store in November 2006 through its convenience store format ‘Reliance Fresh’. Since then RRL has rapidly grown to operate 590 stores across 13 states at the end of Financial Year 2007-08. RRL launched its first ‘Reliance Digital’ store in April 2007 and its first and India’s largest hypermarket ‘Reliance Mart’ in Ahmedabad in August 2007. This year, RRL has also launched its first few specialty stores for apparel (Reliance Trends), footwear (Reliance Footprints), jewellery (Reliance Jewels), books, music and other lifestyle products (Reliance Timeout), auto accessories and service format (Reliance Autozone) and also an initiative in the health and wellness business through ‘Reliance Wellness’. In each of these store formats, RRL is offering a unique set of products and services at a value price point that has not been available so far to the Indian consumer. Overall, RRL is well positioned to rapidly expand its existing network of 590 stores which operate in 57 cities.

Reliance Ventures Limited, a subsidiary of the Company in a joint venture with Haryana State Industrial Investment Development Corporation (HSIIDC), is promoting Reliance Haryana SEZ Limited (RHSEZ) to develop the two SEZs in Haryana State. The proposed SEZs will function as an integrated package with all the required infrastructure facilities to ensure sustainable development of medium and large scale industries and service activities with sufficient provision for future growth and expansion.

More details of the above subsidiaries of the Company are covered in Management’s Discussion and Analysis Report forming part of the Annual Report.

Directors

In terms of Article 155 of the Articles of Association of the Company, Shri R.H. Ambani, Shri S. Venkitaramanan, Prof. Ashok Misra and Shri Nikhil R. Meswani, Directors, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting. Brief resume of the Directors proposed to be reappointed, nature of their expertise in specific functional areas, names of companies in which they hold directorships and memberships /chairmanships of Board Committees, shareholding and relationships between directors inter-se, as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges in India, are provided in the Report on Corporate Governance.

Group

Pursuant to an intimation from the Promoters, the names of the Promoters and entities comprising ‘group’ as defined under the Monopolies and Restrictive Trade Practices (“MRTP”) Act, 1969 are disclosed in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Directors’ Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, it is hereby confirmed that :

(i) in the preparation of the annual accounts, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2008 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a ‘going concern’ basis.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, the audited Consolidated Financial Statements are provided in the Annual Report.

Auditors and Auditors’ Report

M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from all of them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such reappointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further comments.

Cost Auditors

The Central Government had directed an audit of the cost accounts maintained by the Company in respect of textiles, polyester and chemicals businesses. The Central Government has approved the appointments of Shri S. N. Bavadekar, Cost Accountant, for conducting the cost audit for textiles, a part of the polyester business and a part of chemicals business, M/s. V.J. Talati & Co., Cost Accountants, for conducting the cost audit of a part of the chemicals business, M/s. Diwanji & Associates, M/s. Kiran J. Mehta & Co., Cost Accountants for conducting cost audit of a part of the chemicals business and M/s. Bavadekar & Co., M/s. V. Kumar &

Associates, M/s. K. G. Goyal & Associates and Shri R. C. Srivastava, Cost Accountants, for conducting the cost audit of a part of the polyester business for the financial year ended March 31, 2008.

Secretarial Audit Report

As a measure of good corporate governance practice, the Board of Directors of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended March 31, 2008, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreements with the Stock Exchanges, Securities Contracts (Regulation) Act, 1956 and all the Regulations of SEBI as applicable to the Company, including the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors’ Report.

However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure-I to this Report.

Transfer of Unpaid and Unclaimed amounts to IEPF

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, the declared dividends and interest on debentures which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the said Act.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance. The Directors adhere to the requirements set out by the Securities and Exchange Board of India’s Corporate Governance practices and have implemented all the stipulations prescribed. The Company has implemented several best corporate governance practices as prevalent globally.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The declaration regarding compliance with RIL Code of Business Conduct and Ethics for Directors and Management Personnel forms part of Report on Corporate Governance.

The requisite Certificate from the Auditors of the Company, M/s. Chaturvedi & Shah, M/s. Deloitte Haskins & Sells and M/s. Rajendra & Co., confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Acknowledgement

Your Directors would like to express their appreciation for assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani Chairman & Managing Director

Mumbai April 21, 2008


Mar 31, 2007

The Directors are pleased to present the 33rd Annual Report and the audited accounts of the Company for the year ended March 31, 2007.

Amalgamation of Indian Petrochemicals Corporation Limited (IPCL) with the Company

Indian Petrochemicals Corporation Limited (`IPCL') has been amalgamated with the Company. The Scheme of Amalgamation was sanctioned by the Hon'ble High Court of Judicature at Bombay vide Order dated June 12, 2007 as modified vide Order dated July 11, 2007, and by the Hon'ble High Court of Gujarat at Ahmedabad vide Order dated August 16, 2007. The Scheme became effective on September 5, 2007, the Appointed Date of the Scheme being April 1, 2006.

The amalgamation of IPCL with the Company is in line with global trends in the energy and chemicals sector, to achieve size, scale, integration and greater financial strength and flexibility, in the interests of maximizing the overall shareholder value. The amalgamation would also augment the Company's status of being India's only world scale, fully integrated, globally competitive energy company with operations in oil and gas exploration and production (E&P), refining and marketing (R&M), petrochemicals and textiles.

Financial Results

The assets and liabilities of IPCL and its operating results have been incorporated in the Company's books with effect from April 1, 2006 (appointed date). The financial performance of the Company, therefore, includes the financial results of IPCL for the year ended March 31, 2007 and is summarised below :

2006-2007

Rs. Crores US$ Mn*

Gross profit before interest, depreciation 20,524.51 4,722 Less: Interest 1,188.89 274 Depreciation 6,812.16

Less: Transfer from Revaluation Reserve 1,997.01 Less: Transfer from General Reserve - 4,815.15 1,108 Profit before Tax 14,520.47 3,340 Less: Provision for Current Taxation 1,617.10 372 Provision for Fringe Benefit Tax 40.34 9 Provision for Deferred Tax 919.63 212 Profit after Tax 11,943.40 2,747 Add: Balance in Profit and Loss Account 3,029.09 697 Excess provision for tax for earlier years 0.51 0 Amount Available for Appropriation 14,973.00 3,444 Appropriations : General Reserve 10,565.17 2,430 Debenture Redemption Reserve - - Interim Dividend on Equity Shares 1,440.44 331 (includes interim dividend Rs. 95.00 crores paid by IPCL) Proposed Dividend on Equity Shares - - Tax on Dividend 202.02 47 Balance carried to Balance Sheet 2,765.37 636 14,973.00 3,444

2005-2006

Rs. Crores US$ Mn*

Gross profit before interest, depreciation 14,982.01 3,358 Less: Interest 877.04 197 Depreciation 4,853.73

Less: Transfer from Revaluation Reserve 1,452.82 Less: Transfer from General Reserve - 3,400.91 762 Profit before Tax 10,704.06 2,399 Less: Provision for Current Taxation 900.00 202 Provision for Fringe Benefit Tax 30.72 7 Provision for Deferred Tax 704.00 158 Profit after Tax 9,069.34 2,032 Add: Balance in Profit and Loss Account 8,967.86 2,010 Excess provision for tax for earlier years - - Amount Available for Appropriation 18,037.20 4,042 Appropriations : General Reserve 13,382.16 2,999 Debenture Redemption Reserve 37.00 8 Interim Dividend on Equity Shares - - (includes interim dividend Rs. 95.00 crores paid by IPCL) Proposed Dividend on Equity Shares 1,393.51 312 Tax on Dividend 195.44 44 Balance carried to Balance Sheet 3,029.09 679 18,037.20 4,042

* 1 US $ = Rs. 43.47 Exchange Rate as on March 31, 2007 (1 US $ = Rs. 44.615 as on March 31, 2006)

(Financial results for the year 2006-07 are not comparable with 2005-06 as they include the operating results of IPCL)

Results of Operations

Turnover for the year was Rs. 118,354 crore (US$ 27,227 million) against Rs. 89,124 crore in the previous year. During the year, the Company has scaled new heights and set several new benchmarks in terms of sales, profits, net worth and assets.

The net profit for the year was Rs. 11,943 crore (US$ 2,747 million), registering a Compounded Annual Growth Rate (CAGR) of 30% over the past five years.

Dividend

The Directors had declared, on March 10, 2007, an interim dividend of Rs. 11.00 per Equity Share on 122,31,30,426 Equity Shares of Rs. 10 each. The total cash outflow on account of this dividend including tax on dividend was Rs. 1534.14 crores.

The Directors believe in sustained increase in shareholder value, eventually resulting in a higher return threshold and accordingly the Board of Directors has considered the interim dividend paid as the final dividend for the financial year ended March 31, 2007.

The dividend pay out for the year under review has been formulated in accordance with the Company's policy of striving to pay stable dividend linked to long term performance, keeping in view the Company's need for capital for its growth plans and the intent to finance such plans through internal accruals to the maximum.

Investment Rating

The Company has the highest credit rating of AAA from CRISIL, and investment grade rating of Baa2 and BBB from Moody's and S&P respectively. The Company's international rating from S&P is higher than the country's sovereign rating.

Preferential Issue of Warrants

To augment long term resources of the Company for meeting fund requirements of the existing and new businesses and for general corporate purposes including investments, the Company has, in accordance with the statutory provisions including Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 and with the approval of Members through Postal Ballot, issued and allotted on April 12, 2007, 12 crore warrants on preferential basis to entities in the Promoter Group entitling them to apply for equivalent number of fully paid up Equity Shares of Rs. 10 each of the Company at a price of Rs. 1,402/- per Equity Share. In terms of the said Guidelines, these entities have paid 10% of the issue price on subscription to the warrants and the balance issue price would be payable upon exercise of the right to apply for the Equity Shares within a period of 18 months from the date of allotment of the warrants. The warrants/shares issued/to be issued under the preferential offer are subject to lock-in for a period of three years from the date of allotment of warrants.

Employees Stock Option Scheme

Grant of stock options to employees is a time tested and well established mechanism to align the interest of employees with those of the Company, to provide them with an opportunity to share the growth of the Company as also to foster long-term commitment. Towards achieving this goal, approval of the Members of the Company was obtained at the Annual General Meeting held on June 27, 2006 for introduction of Employees Stock Option Scheme.

The Employees Stock Compensation Committee, constituted in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (`the Guidelines'), administers and monitors the Scheme.

The applicable disclosures under the Guidelines are as under :

Total Options granted 2,8 7,28,000

Pricing formula Rs.1,284/- being the closing market price on NSE on March 15, 2007 as rounded off to Rs. 1,284/- plus taxes as may be levied on the Company in this regard

Options vested Nil

Number of Options granted to Nikhil R. Meswani - 7,00,000 Senior Managerial Personnel Hital R. Meswani - 7,00,000 Hardev Singh Kohli - 50,000

Neither any employee has been granted Options equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant, nor has any employee been granted Options amounting to 5% or more of the total Options granted during the year.

The Company has received a certificate from the Auditors of the Company that the scheme has been implemented in accordance with the Guidelines and the resolution of the Company passed at the last Annual General Meeting.

Management's Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The Company has entered into various contracts in the areas of oil & gas, refining and petrochemicals businesses. While benefits from such contracts will accrue in the future years, their progress is periodically monitored.

Additionally, some of the landmark events of the year include the following:

* During the year, the Company commissioned the world's largest polyester expansion project with a capacity of 550 KTA at globally competitive cost in a record time of eighteen months. With this expansion, the Company's polyester capacity has been augmented to 2 million tonnes per year. To keep pace with polyester capacity expansion, the Company also commissioned a 730 KTA of PTA plant at Hazira. In FY 2006-07, the Company expanded its polypropylene capacity by 280 KTA at Jamnagar that increased the overall PP capacity to 1,710 KTA. These expansions are expected to provide the Company significant growth opportunities and sustain leadership position in petrochemicals business.

* The Company plans to further sharpen its focus on the exports of petroleum products of the refinery. Towards this end, the Company has secured the necessary approvals for the conversion of its Jamnagar Complex as an Export Oriented Unit (EOU) with effect from April 16, 2007.

Subsidiaries

During the year, Ranger Farms Limited, Retail Concepts & Services (India) Limited, Reliance Retail Insurance Broking Limited, Reliance Dairy Foods Limited, Reliance Retail Finance Limited, RESQ Limited (subsidiaries of Reliance Retail Limited), Reliance Haryana SEZ Limited (subsidiary of Reliance Ventures Limited), Reliance Exploration & Production - DMCC and Reliance Global Management Services Private Limited became subsidiaries of the Company. The name of Reliance Infrastructure Limited (a subsidiary of the Company) has been changed to Reliance Jamnagar Infrastructure Limited.

In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsidiaries have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any member of the Company interested in obtaining the same. However, as directed by the Central Government, the financial data of the subsidiaries have been furnished under `Details of Subsidiary Companies' forming part of the Annual Report. Further, pursuant to Accounting Standard AS-21, Consolidated Financial Statements presented by the Company include financial results of its subsidiaries.

Reliance Petroleum Limited (RPL), a listed subsidiary of the Company, is making rapid strides on setting up a greenfield petroleum refinery having a total capacity of approximately 5,80,000 barrels per stream day and polypropylene plant having a capacity to produce 0.9 million tonnes per annum. The project, being set up in a Special Economic Zone (SEZ) at Jamnagar in Gujarat at an estimated cost of Rs. 27,000 crore, witnessed significant progress during the year and has achieved several key milestones within a short period of 16 months since kick-off.

Reliance Retail Limited (RRL), a subsidiary of the Company, has launched the new project for carrying on the organised retail business with plans for a pan-India footprint of multi-format retail outlets supported by a state-of-the-art supply chain infrastructure. The store network continues to expand at a rapid pace. Currently there are over 300 Reliance Fresh stores covering more than 30 towns and cities in 12 States.

RRL's focus this year will be on the rapid roll-out of Reliance Fresh and Hypermarkets in various parts of the country.

More details of the subsidiaries of the Company are covered in Management's Discussion and Analysis Report forming part of the Annual Report.

Fixed Deposits

The Company has not accepted any fixed deposit during the year under review.

Directors

Pursuant to the provisions of Section 260 of the Companies Act, 1956 and Article 135 of the Articles of Association of the Company, Dr. Raghunath Anant Mashelkar was appointed as an additional Director with effect from June 9, 2007. Dr. Mashelkar would hold office up to the date of the ensuing Annual General Meeting. The Company has received a notice in writing from a member proposing the candidature of Dr. Mashelkar for the office of Director, liable to retire by rotation.

In terms of Article 155 of the Articles of Association of the Company, Shri Mansingh L. Bhakta, Shri Mahesh P. Modi, Dr. Dharam Vir Kapur and Shri Hital R. Meswani, Directors, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting.

Brief resume of the Directors proposed to be appointed/reappointed, nature of their expertise in specific functional areas and names of companies in which they hold directorships and memberships/chairmanships of Board Committees, as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges in India, are provided in the Report on Corporate Governance forming part of the Annual Report.

Group

Pursuant to an intimation from the Promoters, the names of the Promoters and entities comprising the 'group' as defined under the Monopolies and Restrictive Trade Practices ("MRTP") Act, 1969 are disclosed in the Annual Report.

Directors' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2007 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a 'going concern' basis.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, your Directors provide the audited Consolidated Financial Statements in the Annual Report.

Auditors and Auditors' Report

M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from all of them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such reappointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further comments.

Cost Auditors

The Central Government had directed an audit of the cost accounts maintained by the Company in respect of textiles, polyester and chemicals businesses. The Central Government has approved the appointments of Shri S. N. Bavadekar, Cost Accountant, for conducting the cost audit for textiles, a part of the polyester business and a part of chemicals business, M/s. V.J. Talati & Co., Cost Accountants, for conducting the cost audit of a part of the chemicals business, M/s. Diwanji & Associates, Shri S. Mallikarjuna Rao, M/s. Kiran J. Mehta & Co., Cost Accountants for conducting cost audit of a part of the chemicals business and M/s. Bavadekar & Co., M/s. V. Kumar & Associates, M/s. K. G. Goyal & Associates and Shri R. C. Srivastava, Cost Accountants, for conducting the cost audit of a part of the polyester business for the financial year ended March 31, 2007.

Secretarial Audit Report

The Company voluntarily appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended March 31, 2007, addressed to the Board of Directors of the Company, is attached to the Annual Report. The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreement with the Stock Exchanges, Securities Contracts (Regulation) Act, 1956 and all the Regulations of SEBI as applicable to the Company, including the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act read with the revised Clause 32 of the Listing Agreement as notified by Securities and Exchange Board of India, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure to this Report.

Transfer of Unpaid and Unclaimed amounts to IEPF

Pursuant to the provisions of Section 205 A(5) of the Companies Act, 1956, the declared dividends and interest on debentures which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the said Act.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance. Your Directors adhere to the requirements set out by the Securities and Exchange Board of India's Corporate Governance practices and have implemented all the stipulations prescribed. Over and above the statutory requirements, your Company has implemented several best corporate governance practices as prevalent globally.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The Chairman and Managing Director's declaration regarding compliance with RIL Code of Business Conduct and Ethics for Directors and Management Personnel forms part of Report on Corporate Governance.

The requisite Certificate from the Auditors of the Company, M/s. Chaturvedi & Shah, M/s. Deloitte Haskins & Sells and M/s. Rajendra & Co., confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is annexed to this Report.

Acknowledgement

The Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani Chairman & Managing Director

Place : Mumbai, September 10, 2007.

Annexure to Directors' Report

Particulars required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

(a) Energy Conservation measures taken

International benchmarking of Hazira Olefins plant was taken-up for the year 2005 with Solomon Associates USA. RIL Hazira is in the first quartile with respect to specific energy consumption. Though the energy index has improved from 6043 Btu/Ib to 5679 Btu/Ib, there exists a gap of about 173 Btu/Ib with respect to the best across the globe for the liquid feed crackers. During the major shutdown in April 2006, five nos. energy conservation schemes have been implemented which is expected to further reduce the energy index by about 29 BTU/Ib.

RIL Hazira was adjudged as "Excellent Energy Efficient Unit" at Energy Summit - 2006 held at Chennai by GIL The unit also bagged "The Most Useful Presentation" award. RIL Hazira was awarded with "Certificate of Merit" at National Energy Conservation Award Ceremony - 2006 organized by Ministry of Power, Government of India. (HZ)

Reliance Jamnagar is highly focused on energy conservation. A number of best practices, focused studies and improvement projects have been implemented in last six years and it has helped Reliance Jamnagar refinery to achieve the status of Pacesetting Refinery in the world. Reliance regularly benchmarks its energy conservation levels with global standards, and consistently works towards further improving efficiencies.

In the benchmarking study by an International major - Shell Global Solutions, Reliance Jamnagar has topped the list and has been placed as "Best in Class" on Energy performance for the past 6 years.

Some of the other major energy conservation measures carried out during the year are listed below:

1) A power recovery train has been commissioned along with the PTA - 3 plant at Hazira.

2) A prototype project of combined heat and power cycle has been installed and commissioned for experimentation and data collection and finding out its suitability for replication.

3) An experimental plantation of Jethropha has been carried out in the barren land. The plantation has yielded seeds in the record time of about 20 months. The oil extraction and characterization is under progress.

4) An Energy Conservation Study for process plants has been initiated with the help of advanced process simulation using principles of pinch analysis. The study has unlocked many heat integration opportunities, which are at various stages of detaining and implementation.

5) Supplying power from Sub-station-12 to ETP and isolating Transformer in SS-10 resulted in saving of 1500 units per month.

6) Replacement of Cooling Tower Fan with Energy Efficient FRP Fans.

7) Efficiency improvement from 84 to 86.6 percent in Super Heater H-107 of Cracker plant at Baroda Complex with reduction of excess air in the stack flue gases.

8) In the LPG feed processing unit of Baroda Complex, column C-702 top was diverted to fuel gas system instead of flaring. Saving of fuel gas of 25 Kg. per Hour.

9) Installation of VFD for Fin Fan cooler PAE-2A in LAB plant of Baroda Complex for power saving of 11 KW/Hr.

10) Replacement of appropriate type of steam traps from Inverted Bucket to thermodynamic type in yard piping area at Gandhar Complex resulted in saving of steam.

11) High efficiency axial flow FRP blade fan replacement in cooling tower resulted in saving of power at Nagothane Complex.

12) Insulation revamp of Heater H-12 was done in Cracker plant.

13) Installation of 2X 2.4 MW DG Sets along with HRSG & VAC-Waste heat from new Fuel-oil fired DGs used for generating steam and refrigeration at Allahabad Polyester Unit has resulted in energy saving.

14) For the first time in India in the refinery sector, Plate & Frame type Heat exchangers are installed in the Amine Treating Units - 1 & 2 in the rich amine feed preheat section.

15) Replacement of remaining Aluminium blades of fan of Cooling towers with FRP blades in Sulfur, Aromatics, CDU, and FCC for reduction of power consumption.

(b) Additional Investment/proposals being implemented for reduction of consumption of Energy

1) Increase in Preheat temperature from 241 C to 266 C by Heat recovery from VGO product stream in CDU1 & CDU2.

2) Optimization of CPP operation using offline optimizer.

3) Reduction in Hare loss by providing flare flow meter at various units B/L.

4) Hash steam and condensate recovery in CPP.

5) Steam letdown Energy Conservation Turbine from HP to LMP in ACN plant of Baroda Complex for 450 KW equivalent power generation.

6) Gas Turbine inlet air chilling for a Gas Turbine of Baroda Complex for improving efficiency and sustaining capacity.

7) Pinch Analysis study for Cracker and Power Plants of Baroda Complex for energy conservation through heat integration.

8) Steam traps survey and rectification at Baroda Complex and Gandhar Complex.

9) Heat repellent coating for control room buildings of the Baroda Complex for reducing the refrigeration load and for power saving.

10) Compressor operation in Chloro Alkali plant of Gandhar Complex for better hydrogen recovery.

11) Replacement of existing GRP fans with Aerofoil design FRP blades for cooling towers at Gandhar Complex.

12) Optimization of refrigeration load between VAR and VC machine to reduce power consumption in PVC plant of Gandhar Complex.

13) Operation philosophy of operating B pneumatic conveying system for power saving in PVC plant of Gandhar Complex.

14) Gas turbine inlet air chilling and air duct modification to reduce pressure drop and for better efficiency and heat rate.

15) Use of Natural Gas in place of liquid fuels.

(c) Impact of measures at (a) & (b) above for reduction in consumption of energy and on the cost of production of goods

1) The Hazira site is able to achieve the Energy Index (YTD Feb. 2006) of 1.85 Gcal/MT, which is 1.6% improvement over the same period last year (1.88 Gcal/MT).

2) Various energy conservation measures implemented at Jamnagar resulted in a savings of Rs. 1955 lea/annum.

3) As a result of various Energy Conservation measures taken, ever lowest Specific Energy Consumption of 3.15 MMKCal/MT was achieved by the Company compared to 3.27 MMKCal/MT (combined of all nine sites) of previous year. The reduced consumption of Energy has resulted in savings of Rs. 24.3 crores for the year 2006-07.

4) The Polyester Units at Allahabad, Barabanki, Baulpur, Hoshiarpur, Nagpur and Silvassa have undertaken various Energy Conservation measures, which have resulted in reduction of specific consumption of Energy by 2.5 percent.

5) Similarly at Patalganga the cost reduction due to energy savings schemes work out to Rs. 566 lac/year.

6) At Naroda there had been a saving of more than 2.83 lac units of electricity consumption in a year.

(d) Total Energy Consumption and Energy Consumption per unit of production as per Form 'A' attached hereto

B. TECHNOLOGY ABSORPTION

Efforts made in technology absorption - as per Form B given below:

Form B

1) Research and Development (R & D)

a) Specific areas in which the research and development (R & D) is being carried out

1) Relcat (200X, 100 XY) and Reldonor (RELD 4000, 6000, 7000, 8000 & 9000) for speciality PP grades being developed from concept to bench scale with few pilot plant trial runs.

2) CFD modelling of the FCC reactor riser by UOP and density profiling of the reactor riser using Tomography technique.

3) New grades of Ultra High Molecular Weight, High Density Polyethylene (HDPE) and a new random Polypropylene Copolymer (PPCP) have been added to the Company's products portfolio.

4) Another new product with good business potential - Homo Polyacrylonitrile (Homo-PAN) has undergone successful plant trial.

5) New generation Paraffins dehydrogenation catalyst, RPDC-10, for LAB process is another significant development. The patented formulation that holds promise on pilot scale evaluation is due for commercial trial in 2007-08 and has attractive business potential for the Catalyst Manufacturing Plant at NC.

6) A new low bulk density RELOX-1 catalyst formulation developed at R&D was manufactured at Nagothane plant and successfully proven in Solid state polymerization (SSP-2) unit of New generation (NG3) plant at Hazira has vastly improved the scope for marketing of this catalyst for other Poly Ethylene Terphathalate (PET) plants across the world.

7) With the advent of new generation ternary catalyst system for Butene-1 production from ethylene and its successful plant trials at Nagothane, another new product has been added to the portfolio of Catalysts Business Group, which is now emerging as the business front for all R&D activities related to catalysts and adsorbents.

8) In 2006-07 technology for novel bicomponent filament products developed by RTC was successfully transferred to PG manufacturing for full-scale production on the commercial scale. These products include Recron `Stretch' filaments for comfort stretch in dress materials, shirting & suiting etc. These yarns offer elastic stretch in the fabrics negating the need for use of Lycra type elastic filaments.

9) The ultramicrodenier (DPF<0.2) filament yams, marketed under the Recron `Micrelle' brand, were developed using the novel concept of splittable yams. These filaments offer soft touch, improved moisture transport and visual aesthetic through cross dyeing of the two types of polymer segments used in the yams. RTC has initiated joint work with Reliance's fabrics division in Naroda for end-use research & downstream processing of fabrics with the new filament products.

10) The major development in Staple Fibres concerned the introduction of Recron 3s Short Cut Fibres for use in wet laid nonwovens in end uses such as filter paper in food processing, wall papers, etc. These fibres have been specially developed for export purpose.

11) The Finish Development group in RTC has developed a number of proprietary additives for improving the textile processability of Staple Fibres in downstream operations. A special hydrophilic finish system was developed for dope dyed black staple fibres for use in non-woven applications. Novel finish system for effective dry dispersion of construction grade Recron 3s fibres for use in concrete mix was also developed and the fibre products are commercialised.

12) For the packaging applications, a variety of novel grades of PET resins were developed. These include hotfill resin for food packaging, special reheat grades for carbonated soft drinks and mineral water packaging.

13) RTC has also been involved in developing process solutions for improving the process yield and product quality of the Relpet + grades produced on the new generation PET process technology platform licensed by Invista and commercialised by RIL for the first time in the world.

14) New PET grades demonstrated on the Hazira commercial plant in 2006-07 include Aqua RH and CSD RH grades with proprietary know-how for incorporating the reheat additive. Field-testing of the HP grade PET with UV blocking at 360 nm for packaging of juices, etc. is currently in progress.

15) Development of machine washable 100% wool and wool rich blended suiting fabric.

16) Development of Cotton look fabric with Polyester.

17) Development of fabric of various designs with Dyefast polyester having dyeabilty at temperature below boil.

18) Development of process for improvement of Surface smoothness and crease retention simultaneously in Polyester/Rayon Blended fabric.

b) Benefits derived as a result of it

1) Development of Spherical Magnesium Ethoxide and MagTi based catalyst, RELCAT 100Y and RELCAT 100X respectively in CPF plant enabled PP plant throughput increase by -2.5 TPH in Random and 1.5 TPH in homo grades with a 10% improvement in Bulk Density.

2) 250 KT of improved raffia produced using RELD1000 technology with capability for high-speed machines.

3) New generation catalyst for dehydrogenation of paraffins.

4) Ternary catalyst system for ethylene dimerization to butene-1.

5) RTC has also successfully developed technology for inherently coloured polymer in blue and green shades using novel chemistry. These chips have been successfully spun to give coloured FDY products without the use of pigment masterbatches. This new concept of colouration is an eco-friendly way of coloured fibres and yams without producing wet processing for dyeing.

6) Development of process for simultaneous improvement of crease retention and surface smoothness properties helps get an optimum level of both the parameters for improved garment property.

7) Flame retardant poly/wool suiting fabric offers safety for fire risk areas.

c) Future plan of action

1) To produce catalyst and processes for monomers & co-monomers production.

2) To produce degradable Polyolefins.

3) To produce specialty polymers/new grades of polyolefins for niche market.

4) Development of blends for automobile applications.

5) Process modelling and simulation.

6) Energy efficient separation & purification processes.

7) New generation catalysts for hydrocarbon conversion processes.

8) New approaches towards environment management.

9) Eco-friendly catalysts/Hydrocarbon conversion via bio-routes.

10) Development of stretch fabric with polyester having inherent stretch property to eliminate the use of Lycra filament.

11) Development of Canvas fabric (Used for tent) with Hame retardant property.

12) Development of Ultra-soft suede fabric by using special polyester which get fibrilised during processing.

13) Development of Bulky, woolly feel fabric with Bi-component polyester.

14) Development of Polyester wool blended fabric with water/oil repellency and flame retardancy.

15) Development of Un-crushable/wrinkle free Polyester/wool blended fabric by reengineering yarn/fabric/processing parameters.

16) Establishment of FCC R&T facility will involve setting up of a 1.5 barrel per day re-circulating pilot plant, cold flow units, testing and evaluation rigs for chemical and physical properties of catalysts/additives. The research work is aimed at developing and evaluating new generation FCC catalysts.

d) Expenditure on R & D

Rs. Crore

a) Capital 167.40 b) Recurring 157.30 Total 324.70 c) Total R & D as a percentage of total turnover 0.27

2. Technology absorption, adoption and innovation

Efforts made towards technology absorption, adoption and innovation:

1) Commissioned & stabilized successfully, 120 KTA Cracker DBN with total in-house design & engineering.

2) Techno-economic evaluation of provision of parallel reactor in MEG 3, for using high selectivity catalyst, carried out.

3) Overhead condenser installed in PVC plant on trial basis on one reactor with in-house basic & detailed engineering.

4) The Naphtha Cracker plant at Baroda Complex is revamped for plant capacity increase as well as substantial improvement in product yields and energy efficiency. The furnaces are revamped to state of art new technology design for higher yields with resultant favourable impact on consumption of raw material. The furnaces are also modified from natural draft to induced draft design through using waste heat boiler for producing steam and thereby improved furnace efficiency. These changes to new vintage technology design shall ensure competitiveness of cracker plant.

5) The Pyrolysis Gasoline Hydrogenation (PGH) unit second stage and the Benzene plants are modified for capacity increase. The Benzene plant is revamped with extractive distillation technology supplied by M/s. GTC, USA.

6) Cracking of Propane along with Ethane implemented in Cracker plant at Baroda Complex.

7) New BOPP grade of PP (Poly-Propylene) made at Jamnagar using latest generation SHAG 320 catalyst & ADT-5100 donor.

8) Capacity enhancement/New grade development/Improvement and Cost reduction

* Debottlenecking carried out in Cracker, PP, PE, PVC, VCM and PSF plants.

* New PSF grades, 0.9 den & 1.5 den Solid siliconised, developed.

* New PSF grades, 15 den Hollow Silicon + non-silicon (mixed with two crimper) developed.

* New grade C200MN developed in PP plant for Crate application for Reliance retail.

* Developed alternate chemicals and catalysts in PVC & PSF plants.

* SH/CM purifier height increased in PE 1 plant.

* Basic & Detailed Engineering for PDEB revamp from 250 Kg/hr to 600 Kg/hr completed in-house, by utilizing existing spare equipment/columns.

* New sludge handling facility of 10 MT per day capacity provided in ETP.

* Additional treatment facility (70 mt of COD per day) provided in ETP, which included Anaerobic and Aerobic treatment.

Benefits Derived as a result of the above efforts

1) HTPB is required in special application, which is of national interest. Hence manufacturing of this product has met this requirement.

2) Provision of parallel reactor in MEG plant to increase plant potential capacity by 21 KTA.

3) Overhead condenser provision in PVC plant to enhance production potential by 16 KTA.

4) The cracking of Propane along with Ethane in Cracker plant led to upgradation of Propane value from Fuel to Feed.

5) Additional Coker Gas Compressor has helped in increased Coker thruput and thereby further enabling processing of heavier crude.

6) Capacity enhancement/New grade development/Improvement and Cost reduction

* Debottlenecking activity resulted in increase in Cracker plant capacity by 120 KTA, PP plant by 15 KTA, PE plant by 8 KTA, PVC plant by 16 KTA, VCM plant by 6 KTA and PSF plant by 7 KTA.

* Implementation of LP Steam export to Cracker from PTA 3 plant has resulted in steam consumption reduction equivalent of 14 TPH SHP steam and Rs. 8.7 crores/year.

* Utilization of 25 TPH of PTA-3 of 3.5 K Steam in Cracker and CPP Deaerator through surplus injection in CPP STG-2. Avoided 25 TPH of 3.5 Bar steams venting and resulted in savings of Rs. 7.7 crores per year.

* PDEB revamp will increase production potential by 3 KTA.

* Production of 0.8 and 1.0 Denier with 3381 hole spinneret's in PSF plant instead of 2800 hole spinneret's resulted in increase in productivity by 7 KTA.

* New sludge handling facility in ETP has enabled processing of additional sludge generated in ETP expansion.

* Wet resin/off spec generation reduced by upgrading stripping column trays in PVC plant.

* Deduster installed in PP bagging section to remove fines and improve product quality.

* Sonic algae controller installed in Raw water pond in CPP to reduce TOG in from 10 ppm to 6 ppm.

* Reduction in downtime/quality in ICP production by installing RADER valve in PP plant line A.

* Project under advance stage of implementation to improve furnace feed EDC quality in VCM plant by installing REDC column, HC1 stripper.

* Use of alternate catalyst/chemicals in PP plant to improve product quality.

Improvement of Dart strength from 2.5 to 3.0 in Film grade by increasing IPS pressure in PE plant.

Information regarding Imported Technology

Product Technology from Year of Status of Import implementation/ absorption

PET Resin INVISTA (U.S.A.)/ 2003 Full (RELPET UOP SINCO PLUS) (NG3) (ITALY)

Butadiene JSR, Japan 2005 Full

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

1. Activities relating to export, initiatives to increase exports, Developments of New export markets for Products and Services and Export Plan.

The Company has continued to maintain focus and avail of export opportunities based on economic considerations. During the year the company has exports (FOB value) worth Rs. 58,531.32 crores (US$ 13,464.80 million)

2. Total Foreign exchange earned and used

Rs. Crore

a. Total Foreign Exchange earned 58,532.42 b. Total savings in foreign exchange Through products manufactured by the Company and deemed exports (US$ 15,107.5 million) 65,672.41 Sub-total (a+b) 1,24,204.83 c. Total Foreign Exchange used 82,299.75


Mar 31, 2006

The Directors are pleased to present the 32nd Annual Report and the audited accounts for the year ended March 31, 2006.

Financial Results

The performance of the Company for the financial year ended March 31, 2006 is summarised below:

2005-2006

Rs. Crs. US$ Mn* Gross profit before interest, depreciation 14,982.01 3,358 Less: Interest 877.04 197 Depreciation 4,853.73 Less: Transfer from Revaluation Reserve 1,452.82 Less : Transfer from General Reserve - 3,400.91 762 Profit before Tax 10,704.06 2,399 Less: Provision for Current Taxation 900.00 202 Provision for Fringe Benefit Tax 30.72 7 Provision for Deferred Tax 704.00 158 Profit after Tax 9,069.34 2,032 Add: Balance in Profit and Loss Account 8,967.86 2,010 Amount Available for Appropriation 18,037.20 4,042 Appropriations : General Reserve 13,382.16 2,999 Debenture Redemption Reserve 37.00 8 Proposed dividend on Equity Shares 1,393.51 312 Tax on dividend 195.44 44 Tax on Dividend for earlier years - - Balance carried to Balance Sheet 3,029.09 679 18,037.20 4,042

2004-2005

Rs. Crs. US$ Mn* Gross profit before interest, depreciation 14,260.84 3,260 Less: Interest 1,468.66 336 Depreciation 3,784.57 Less: Transfer from Revaluation Reserve - Less : Transfer from General Reserve 61.07 3,723.50 851 Profit before Tax 9,068.68 2,073 Less: Provision for Current Taxation 705.00 161 Provision for Fringe Benefit Tax - - Provision for Deferred Tax 792.00 181 Profit after Tax 7,571.68 1,731 Add: Balance in Profit and Loss Account 5,592.06 1,278 Amount Available for Appropriation 13,163.74 3,009 Appropriations : General Reserve 3,000.00 686 Debenture Redemption Reserve - - Proposed dividend on Equity Shares 1,045.13 239 Tax on dividend 146.58 33 Tax on Dividend for earlier years 4.17 1 Balance carried to Balance Sheet 8,967.86 2,050 13,163.74 3,009

* 1 US $ = Rs 44.615 Exchange Rate as on March 31, 2006 (1 US $ = Rs 43.745 as on March 31, 2005)

Results of Operations

Turnover for the year increased by 22 per cent from Rs 73,164 crore to Rs 89,124 crore (US$ 19,976 million). RIL scaled the unique milestone of becoming the first Indian private sector company to record a net profit of over US$ 2 billion thereby doubling its profit in a span of just 24 months.

RILs net profit for the year was Rs. 9,069 crore (US$ 2,033 million), thereby registering a Compounded Annual Growth Rate (CAGR) of 28 per cent over the past five years. Cash profit increased to Rs 13,174 crore (US$ 2,953 million) from Rs 12,087 crore in the previous year, an increase of 9%.

Dividend

The Directors have recommended a dividend of Rs. 10.00 per Equity Share (last year Rs. 7.50 per Equity Share) on 139,35,08,041 Equity Shares of Rs 10/- each for the financial year ended March 31, 2006, which, if approved at the ensuing Annual General Meeting, will be paid to (i) all those Members whose names appear in the Register of Members as on June 2, 2006 and (ii) all those Members whose names appear on that date as beneficial owners as furnished by National Securities Depository Limited and Central Depository Services (India) Limited.

RIL has consistently increased dividend paid out for the past 14 years. In the past 5 years, the dividend paid out has increased at the rate of 25.5% on an annualised basis.

The dividend pay out for the year under review has been formulated in accordance with the Company's policy of striving to pay stable dividend linked to long term performance, keeping in view the Company's need for capital, its growth plans and the intent to finance such plans through internal accruals to the maximum. Your Directors believe that this would increase shareholder value and eventually lead to a higher return threshold.

Management's Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The Company has entered into various contracts in the areas of oil & gas, refining and petrochemicals businesses. While benefits from such contracts will accrue in the future years, their progress is periodically monitored.

Additionally, some of the landmark events of the year included the following:

* Reliance demonstrated a new strategic move to unlock enormous value for its shareholders by reorganizing RIL's business through a process of demerger. In this process, RIL's investments in power generation and distribution, financial services and telecommunication services were demerged in to separate entities and RILs shareholders received shares in the new entities in the same proportion of their equity holdings in RIL.

* RIL commenced the setting up of a new refinery through its subsidiary Reliance Petroleum Limited (RPL). The capital cost of the RPL project is estimated at Rs. 27,000 crore (approximately US$ 6 billion). RPL expects to commission the project by around December 2008. RPL recently completed its Initial Public Offering and is now a listed entity on the major stock exchanges in India thereby creating tremendous value for RILs shareholders. RIL holds 75% in RPL and has invested Rs 6,750 crore as equity contribution in RPL.

* RILs business performance and strong capital structure were duly recognized through an upward re-rating of its borrowings by international credit rating agencies, namely Moodys' and Standard & Poor. RIL is now rated above India's sovereign rating and is at Baa2 (Moodys') and BBB (S & P). The upgrade reflects Reliance's competitive position in refining and petrochemicals and overall moderate financial profile.

* RIL announced the closure of the buy-back of equity shares with effect from August 2, 2005. This was pursuant to the programme achieving its key objective of ensuring a positive impact on the stock price thereby contributing to maximization of overall shareholder value.

* The Board of Directors gave its consent to pursue Retail Business through a subsidiary of the Company. The Board has approved the initial phase of setting up of hypermarkets/supermarkets/convenience stores/specialty stores etc. in select cities and towns covering the entire geographical region in the country at an estimated cost of US$ 750 million.

Scheme of Arrangement for demerger

During the year, the Company has, pursuant to the provisions of Sections 391 to 394 of the Companies Act, 1956, and with the approvals of the shareholders and creditors as also of the Hon'ble High Court of Judicature at Bombay, has demerged and transferred, through a Scheme of Arrangement (the Scheme), its undertakings/businesses pertaining to (a) Coal based Energy Undertaking to Reliance Energy Ventures Limited; (b) Gas based Energy Undertaking to Reliance Natural Resources Limited (formerly Global Fuel Management Services Limited); (c) Financial Services Undertaking including Insurance to Reliance Capital Ventures Limited; and (d) Telecommunications Undertaking to Reliance Communication Ventures Limited. The shareholders of the Company, other than the specified shareholders, as defined in the Scheme were allotted equity shares by the Resulting Companies, in terms of the Scheme. The shares of the resulting companies are listed on the Stock Exchanges.

The successful implementation of the Scheme for demerger has resulted in enhancement of the shareholder value.

Subsidiaries

During the year, Reliance Industries (Middle East) DMCC, Reliance Power Limited, Reliance Patalganga Power Limited, Reliance Thermal Energy Limited, Jayamkondam Power Limited, Reliance Natural Resources Limited (formerly Global Fuel Management Services Limited), Reliance Energy Ventures Limited, Hirma Power Limited, Reliance Communication Ventures Limited, Reliance Capital Ventures Limited, Relene Petrochemicals Limited, Reliance Infrastructure Limited (formerly Reliance Project Engineering Associates Private Limited), Reliance Petroleum Limited, Reliance Retail Limited and Reliance Netherlands BV (subsidiary of Reliance Ventures Limited) became subsidiaries of the Company. Subsequently, pursuant to the Scheme of Arrangement for demerger, Reliance Power Limited, Reliance Patalganga Power Limited, Reliance Thermal Energy Limited, Jayamkondam Power Limited, Reliance Natural Resources Limited (formerly Global Fuel Management Services Limited), Reliance Energy Ventures Limited, Hirma Power Limited, Reliance Communication Ventures Limited and Reliance Capital Ventures Limited ceased to be subsidiaries of the Company. Further during the year, Reliance Power Ventures Limited, Reliance LNG Limited, Reliance Gas Pipelines Limited (formerly Gas Transportation & Infrastucture Company Limited), Reliance Technologies LLC, Reliance do Brasil Industria e Comercio de Products Texteis, Quimicos, Petroquimicos e Derivados Limited (Reliance Brazil LLC.) and Relene Petrochemicals Private Limited have ceased to be subsidiaries of the Company.

Reliance Petroleum Limited (RPL), a subsidiary of the Company, made IPO of 135 crore equity shares of Rs.10/- each at Rs.60/- (including a premium of Rs.50/-) per share, through 100% book building process and the IPO received an overwhelming response from all the categories of investors.

The equity shares of RPL will be listed on Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE).

In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsisting subsidiaries have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same. However, as directed by the Central Government, the financial data of the subsidiaries have been furnished under `Details of Subsidiaries' forming part of the Annual Report. Further, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company includes financial information of its subsidiaries.

Fixed Deposits

The Company has not accepted any fixed deposits during the year under review.

De listing

During the year, the Company's equity shares were delisted from the Calcutta Stock Exchange Association Limited (CSE). The Company's equity shares continue to remain listed on Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE).

Directors

Pursuant to the provisions of Section 260 of the Companies Act, 1956 and Article 135 of the Articles of Association of the Company, Prof. Dipak C. Jain was appointed as an Additional Director with effect from August 4, 2005. Prof. Dipak C. Jain would hold office up to the date of the ensuing Annual General Meeting. The Company has received a notice in writing from a member proposing the candidature of Prof. Dipak C. Jain for the office of Director, liable to retire by rotation.

In terms of Article 155 of the Articles of Association of the Company, Shri Nikhil R. Meswani, Shri H. S. Kohli and Shri Y.P Trivedi, retire by rotation and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting.

Brief resume of the Directors proposed to be appointed/reappointed, nature of their expertise in specific functional areas and names of companies in which they hold directorships and memberships/chairmanships of Board Committees, as stipulated under Clause 49 of Listing Agreements with the Stock Exchanges in India, are provided in the Report on Corporate Governance forming part of the Annual Report.

Directors' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2006 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv)the Directors have prepared the annual accounts of the Company on a `going concern' basis.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, your Directors provide the audited Consolidated Financial Statements in the Annual Report.

Auditors and Auditors' Report

M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins & Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from all of them to the effect that their appointment/reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment/reappointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further comments.

Cost Auditors

The Central Government had directed an audit of the cost accounts maintained by the Company in respect of its Textiles, Polyester and Chemicals businesses. The Central Government has approved the appointments of Shri S.N. Bavadekar, Cost Accountant, for conducting the cost audit for the Textiles, Polyester and a part of Chemicals businesses and M/s. V.J. Talati & Co., Cost Accountants, for conducting the cost audit of a part of the Chemicals business for the financial year ended March 31, 2006.

Secretarial Audit Report

The Company voluntarily appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit of the Company for the financial year ended March 31, 2006. The Secretarial Audit Report addressed to the Board of Directors of the Company is attached to this Annual Report. The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreement with the Stock Exchanges, Securities Contracts (Regulation) Act, 1956 and all the Regulations of SEBI as applicable to the Company, including the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure to this Report.

Transfer of Unpaid/Unclaimed amounts to IEPF

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, the declared dividends and interest on debentures which remained unpaid/ unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central

Government pursuant to Section 205C of the said Act.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance. Your Directors adhere to the requirements set out by the Securities and Exchange Board of India's Corporate Governance practices and have implemented all the stipulations prescribed. Over and above the statutory requirements, your Company has implemented several best corporate governance practices as prevalent globally.

Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges in India forms part of the Annual Report.

Certificate from the Auditors of the Company, M/s. Chaturvedi & Shah, M/s. Deloitte Haskins & Sells and M/s. Rajendra & Co., confirming compliance of conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is annexed to this Report.

Acknowledgement

The Directors would like to express their grateful appreciation for assistance and co-operation received from the Financial Institutions, Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the Executives, Staff and Workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani Chairman & Managing Director

Place : Mumbai, April 27, 2006

Annexure to Directors' Report

Particulars required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

(a) Energy conservation measures taken

Energy conservation through continuous improvement in efficiency is given a very high priority at all our plants and offices. Our Refinery has been placed in the top quartile in the Energy Intensity Index of refineries across the world by Solomon Associates and has been adjudged as the pace setter Refinery in Energy Index according to a benchmarking study done by energy major Shell. At our Hazira and Naroda sites, captive power and steam generation has been switched over to Natural Gas from liquid fuels resulting in significant reduction in specific energy cost. Two energy efficiency projects estimated 23391 Certified Emission Ratings (CERs) per annum has been validated under The Kyoto Protocol for registration as Clean Development Mechanism (CDM) projects with UNFCCC. In order to extend the energy conservation drive to the employees and their families at large, an Energy Month Celebration was observed during November, 2005 & December, 2005 which was culminated with Energy Day Celebration on December 16, 2005.

Some of the other major energy conservation measures carried out during the year are listed below:

1) High efficiency reverse osmosis was commissioned at Hazira, which is one of its first kinds in India for fresh water application. The project is expected to almost double the cycle of concentration for boiler operations.

2) An optimizer for steam and power system was developed and implemented at Jamnagar to adjust controllable parameters continually to reduce energy consumption.

3) Heat recovery from HRSG flue gases for ETP sludge dewatering and drying at Patalganga.

4) Upgradation of Effluent treatment system and use of biogas in PX process heater at Patalganga.

5) DM Water consumption was reduced by more than 10% at Naroda through better utilization of valves and reducing leakages.

6) GT to HRSG duct insulation work was completely renovated at Naroda resulting in achieving steam temperature required for steam turbine operation even at very low loads of gas turbine.

(b) Additional investment/proposals being implemented for reduction of consumption of energy

1) An energy conservation study for process plants has been initiated with the help of advanced process simulation using principles of pinch analysis.

2) A prototype project for usage of solar energy for power generation is being executed for assessing its suitability at Hazira.

3) Research & Development project is planned to carry out the techno-economic feasibility study of Fuel Cell Technology.

4) A power recovery train is planned to be commissioned at Hazira to further enhance the energy efficiency of the PTA plant.

(c) Impact of measures at (a) & (b) above for reduction in consumption of energy and on the cost of production of goods

1) At our Refinery, fuel and loss as percentage of crude oil processed has been reducing for the past three years, indicating continuous improvement in energy efficiency of the refinery.

2) At Hazira and Patalganga sites, the energy index has shown a reducing trend over the last three years on account of energy conservation schemes and absorption of energy efficient technologies.

(d) Total energy consumption and energy consumption per unit of production as per Form 'A' attached hereto

B. TECHNOLOGY ABSORPTION

Efforts made in technology absorption - as per Form B given below:

Form B

1) Research and Development (R&D)

R&D efforts of RIL group is recognized by Govt of India through prestigious DSIR award in development of Para Diethyl Benezene process and NG3 technology absorption. We also received the Golden Peacock award for innovative technology development for Para Diethyl Benzene.

a) Specific areas in which the research and development (R & D) is being carried out

1) Extractive distillation unit commissioned in Paraxylene plant for extracting benzene from Light Reformate.

2) Field signature method has been used in Crude & vacuum distillation unit.

3) H Scan technique has been used for hydrogen plant & placed at reformer tubes

4) Novel series of external donor system developed from concept to production for Polypropylene plant.

5) Development of fourth generation morphological PP catalyst from lab to pilot scale.

6) Polymer application development towards metal body replacement of weighing machine and automotives, luggage and safety equipments and application for reinforcement PP composites.

7) High performance wood filled PVC composites development and its application and development of transparent PVC grades

8) MagTi based catalyst prepared and successfully tested in fluidized bed reactor in PP plant.

9) Spherical Magnesium Ethoxide based catalyst produced in house and trial taken in PP reactor to produce Random and Homo grades.

10) Installation of Combined-Cooling-Heating & Power Project at Retail Outlet Plant, Hazira.

11) Development of lightweight wool-blended fabrics with high abrasion resistance & tensile properties.

12) Optimization of water & oil repellent high performance fabrics with Non-Iron properties after repeated washings.

13) Development of Cool & Dry Polyester-rayon suiting having moisture management as well as stain release properties.

14) Development of Polyester-wool-Silk tri-blends and wool-silk blended fabrics for international market on worsted spinning system.

15) Optimization of finishing process from stretch fabrics to get dimensionally stable bi-stretch and weft-stretch fabrics.

16) Development of Polyester & Rayon chenille furnishing fabrics using package-dyed chenille yarns.

17) Study and development of light weight inherent flame-retardant and stain repellent Polyester fabrics for protective end use.

18) Development of new filament products using the Bicomponent Melt Spinning technology. These products include Recron `Stretch' filaments for comfort stretch in dress materials, shirting & suiting etc.

19) Ultra micro denier (DPF < 0.2) filament yarns, marketed under the Recron `Micrelle' brand, were developed using the novel concept of splittable yarns. These filaments offer soft touch, improved moisture transport and visual aesthetic through cross dyeing of the two types of polymer segments used in the yarns.

20) Cationic dyeable `Superdye' filament yarns dyeable at 90 Degree C were commercialized for nylon replacement.

21) Introduction of Recron 3s Short Cut Fibres for using wet laid nonwovens in end uses such as filter paper in food processing, wall papers, etc.

22) For the packaging applications, a variety of novel grades of PET resins were developed. These include hotfill resin for food packaging, special reheat grades for carbonated soft drinks and mineral water packaging.

23) Evaluation of downstream processability of the speciality fibre products, development of 100% bioactive spun yarn NE 30, NE 4.5 spun yarn on open end spinning.

24) Optimisation of polyester fibre with different cut length in Polyester- Cotton blend.

25) Development of Process Parameter of 100% Cotluk spun yarn etc.

b) Benefits derived as a result of R & D efforts

1) The Extraction Distillation unit has resulted in increased Benzene production and improved quality of gasoline due to extraction of benzene from Light reformate stream.

2) Field signature method is a corrosion monitoring technique and helps in early warning signal to maintain better product slate consistently.

3) H Scan technique finds out thickness, measurement and condition of tubes in terms of cracks, voids, flaws etc. leading to consistent plant operation

4) Enhancement in the performance of polypropylene catalysts by Novel series of external donor system and improved product characteristics of woven sacks grades suitable for high speed processing lines.

5) Development of fourth generation morphological PP catalyst resulted in improvement in resin characteristic.

6) Throughput at PP system is increased with improvement in Bulk Density, with help of MagTi based catalyst.

7) Based on the results from the study on Oxy reactor, modifications are being carried out in the reactor of VCM plant which will improve reliability and run length of Oxy reactor.

8) By Installation of Combined-Cooling-Heating & Power Project at Retail Outlet Plant, fuel utilization efficiency has been increased.

9) Developed lightweight wool-blended fabrics with very high abrasion resistance and tensile properties suitable for uniform fabrics.

10) Development of new polymer and polyester product grades has created new applications and has also resulted in substitution of either competing products or imports, thereby leading to higher sales in the domestic market.

c) Future plan of action

1) Development of premium grade gasoline and diesel, and development of Oxygenate free gasoline

2) Standardization of processing and finishing process for Nano-finishes on Polyester-Rayon and Polyester wool Fabrics.

3) Optimization of back-coating application on furnishing fabrics including chenille fabrics to impart stability to fabric and to increase abrasion resistance.

4) Development of high wet-fast Navy shade for Polyester-Rayon blended uniform fabric with stain repellent properties.

5) Optimization of processing and finishing techniques to have silk-touch on Polyester-rayon fabrics.

6) Development of amino acid and other health finishes on Polyester-wool blended fabrics.

d) Expenditure on R & D

Rs. Crore

a) Capital 63.48

b) Recurring 46.86 Total 110.34

c) Total R & D as a percentage of total turnover 0.12

2. Technology Absorption, Adoption and Innovation

a) Efforts made towards technology absorption, adoption and innovation:

1) Butadiene Extraction Plant commissioned after receipt of basic Engineering Documents from Technology Licensor.

2) PSF plant commissioned at Hazira with new technology by M/s Zimmer.

3) Impact grade in PP successfully produced with SHAC 310 and ADT 1000B.

4) A new Catalyst Recovery Unit commissioned with technology of M/S Invista for recovery of precious metals like cobalt and manganese. Recovered metals will be recycled back to the process.

5) Scheme developed and implemented for removal of chlorinated hydrocarbons from waste coke generated in VCM plant.

6) Reduction in generation of Glycol Residue-I in MEG-3 plant by chemical cleaning and passivation of the system.

7) Incorporating Swing Reactor Technology in PE - II plant for production of LLDPE.

8) In-house design and implementation of C5 hydrogenation scheme in spare C4 hydrogenation unit.

9) Capacity enhancement/New grade development/Improvement and Cost reduction :

* PP plant production increase by extruder screw speed increase, melt pump modification and installation of larger screenpack.

* 3 new grades namely, Spun lace, Low elongation and Optically Whitened virgin product developed in PSF.

* Dimer impurity in butadiene product reduced from 150ppm to 50ppm by undertaking various process improvement steps.

* LP flash steam generation in LP condensate tank in PE plant has resulted in saving of LP steam @ 2TPH per plant.

* Provision of VFD in booster Pump in PE plants for increasing the capacity.

* Two new 35 MW Gas Turbines with 125 TPH HRSGs installed at Hazira.

* VCM plant capacity increased from 900 MTPD of VCM to 1014 MTPD of VCM through in house study and modifications.

* New grade of low cost Optical whitener developed for use in PSF plant.

b) Benefits derived as a result of the above efforts

1) Value addition in Cracker by-product due to butadiene extraction.

2) Production of PSF from new plant.

3) Value addition to byproduct from catalyst production facility.

4) Potential to produce additional PP with improved product quality in Fiber and Impact grades.

5) Stripping of chlorinated hydrocarbons from coke helped in safe disposal of solid waste generated in VCM plant.

6) Reduction in generation of Glycol Residue-I in MEG-3 plant by 3 MT per day.

7) Additional production of LLDPE.

8) Increased ethylene + propylene yield when C5 is recycled and cracked in furnaces.

9) Capacity enhancement/New grade development/Improvement and Cost reduction :

* Potential increase in PP plant by approximately 12 KTA.

* 3 new grades in PSF are for capturing high value niche market with specialty grades.

* Better Butadiene product quality and acceptability in market, especially export market and improved customer satisfaction.

* Recovery of energy as flash steam in both PE plants.

* Potential increase in production capacity in PE plants by 5 KTA.

* The steam and power demand for new projects met through these new installations in CPP

* Higher VCM production.

* Lower variable operating cost in PSF.

c) Information regarding imported technology

Product Technology from Year of Status of Import implementation/ absorption

PET Resin [RELPET PLUS] INVISTA (U.S.A) 2003 Full [NG3] /UOP SINCO (ITALY)

Butadiene JSR, Japan 2005 Full

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

1. Activities relating to export, initiatives to increase exports, developments of new export markets for products and services and export plan

The Company has continued to maintain focus and avail of export opportunities based on economic considerations. During the year the Company has exports (FOB value) worth Rs.30,819.60 Crore (US$ 6907.90 million)

2. Total Foreign Exchange earned and used

Rs. Crore

a. Total Foreign Exchange earned 30,820.65

b. Total savings in foreign exchange through products manufactured by the Company and deemed exports (US$ 9,912 million) 44,224.23

Subtotal (a+b) 75,044.88

c. Total Foreign Exchange used 60,520.85


Mar 31, 2005

The Directors are pleased to present the 31st Annual Report and the audited accounts for the year ended March 31, 2005.

Financial Results

The performance of the Company for the financial year ended March 31, 2005 is summarised below:

2004-2005

Rs Crs. US$ Mn*

Gross profit before interest, 14,260.84 3,260 depreciation Less : Interest 1,468.66 336 Depreciation 3,784.57 Less : Transfer from General Reserve 61.07 3,723.50 851 Profit before Tax 9,068.68 2,073 Less : Provision for Current Taxation 705.00 161 Provision for Deferred Tax 792.00 181 Profit after Tax 7,571.68 1,731 Add : Balance in Profit and 5,592.06 1,278 Loss Account Taxation Reserve Written Back - - Taxation for Earlier Years - - Debenture Redemption Reserve - - written back Investment Allowance (Utilised) - - Reserve Written Back Amount Available for Appropriation 13,163.74 3,009 Appropriations: General Reserve 3,000.00 686 Proposed dividend on Equity Shares 1,045.13 239 Tax on dividend 146.58 33 Tax on Dividend for earlier years 4.17 1 Balance carried to Balance Sheet 8,967.86 2,050 13,163.74 3,009

2003-2004

Rs Crs. US$ Mn*

Gross profit before interest, 10,982.88 2,512 depreciation Less : Interest 1,434.72 328 Depreciation 3,331.39 Less : Transfer from General Reserve 84.37 3,247.02 743 Profit before Tax 6,301.14 1,441 Less : Provision for Current Taxation 351.00 80 Provision for Deferred Tax 790.00 181 Profit after Tax 5,160.14 1,180 Add : Balance in Profit and 3,343.06 765 Loss Account Taxation Reserve Written Back 10.00 2 Taxation for Earlier Years (23.03) (5) Debenture Redemption Reserve 850.00 194 written back Investment Allowance (Utilised) 76.63 18 Reserve Written Back Amount Available for Appropriation 9,416.80 2,154 Appropriations: General Reserve 3,000.00 686 Proposed dividend on Equity Shares 733.10 168 Tax on dividend 91.64 21 Tax on Dividend for earlier years - - Balance carried to Balance Sheet 5,592.06 1,279 9,416.80 2,154

* 1 US $ = Rs 43.745 Exchange Rate as on March 31, 2005 (1 US $ = Rs 43.7175 as on March 31, 2004)

Buy Back

Pursuant to the Buy Back Offer made in accordance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, the Company has bought back 28,69,495 Equity Shares of Rs 10 each of an aggregate face value of Rs 2,86,94,950 as of March 31, 2005. Consequent to the Buy Back, the Paid up Equity Share Capital of the Company as on March 31, 2005 stood reduced to Rs 1393,50,80,410.

Dividend

The Directors have recommended a dividend of Rs 7.50 per Equity Share (last year Rs 5.25 per Equity Share) on 139,35,08,041 Equity Shares of Rs 10 each for the financial year ended March 31, 2005, which, if approved at the ensuing Annual General Meeting, will be paid to (i) all those Members whose names appear in the Register of Members as on May 13, 2005 and (ii) all those whose names appear on that date as beneficial owners as furnished by National Securities Depository Limited and Central Depository Services (India) Limited.

The dividend pay out for the year under review has been formulated in accordance with the Company's policy of striving to pay stable dividend linked to long term performance, keeping in view the Company's need for capital, its growth plans and the intent to finance such plans through internal accruals to the maximum. Your Directors believe that this would increase shareholder value and eventually lead to a higher return threshold.

Management's Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

The Company has entered into various contracts in the areas of oil & gas, refining, petrochemicals and telecommunication businesses. While benefits from such contracts will accrue in the future years, their progress is periodically monitored.

The Board of Directors, at its meeting held on June 18, 2005, decided to consider a scheme of reorganisation of the businesses of the Company and has authorised the Corporate Governance and Stakeholders' Interface Committee to examine the matter and suggest a proposal to the Board of Directors for its consideration.

The Board of Directors at its meeting held on June 28, 2005, decided to execise the option to convert, 162 Crore 10% Cumulative Convertible/Redeemable Preference Shares of Reliance Infocomm Limited, subscribed at an aggregate value of Rs.8,100 Crore alongwith the accrued premium of Rs. 1,108.27 Crore, into fully paid up equity shares of the face value of Re.1 each of Reliance Infocomm Limited at a price of Rs.32 per equity share.

Subsidiaries

During the year, Reliance Communications (Canada) Inc. and Reliance Netway Inc. became subsidiaries of Reliance Communications Inc., a subsidiary of Reliance Infocom Inc., Reliance Infocom BV as also of the Company. Further, Reliance Communications (Hongkong) Limited became a subsidiary of Reliance Infocom BV as also of the Company. Subsequently, Reliance Infocom BV ceased to be subsidiary of the Company and consequently all the subsidiaries of Reliance Infocom BV, namely Reliance Infocom Inc., Reliance Communications (UK) Limited, Reliance Communications (Hongkong) Limited, Reliance Communications Inc., Reliance Communication International Inc., Reliance Communications (Canada) Inc. and Reliance Netway Inc., have ceased to be subsidiaries of the Company.

During the year, Reliance do Brasil Industrie Comercio de Produtos Texteis, Qufmicos, Petroqufmicos e Derivados Ltda (Reliance Brazil LLC) became a subsidiary of the Company.

After the close of the financial year 2004-2005, Reliance Industries (Middle East) DMCC became a subsidiary of the Company.

In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the subsidiaries have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same. However as directed by the Central Government, the financial data of the subsidiaries have been furnished under 'Details of Subsidiaries' forming part of the Annual Report. Further, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company includes financial information of its subsidiaries. '

Fixed Deposits

The Company has not accepted any fixed deposits during the year.

Directors

The Directors express their profound grief on the sad demise of Shri T.R.U. Pai on January 26, 2005. Shri Pai was a member of the Board since July 6, 1979 and contributed immensely to the Company's growth. Your Directors place on record their deep appreciation for the valuable advice and guidance rendered by him to the Company during his tenure as Director of the Company.

Pursuant to the provisions of Section 262 of the Companies Act, 1956 Prof. Ashok Misra was appointed as Director in the casual vacancy in the office of Directors on account of the death of Shri T. R. U. Pai. Prof. Ashok Misra would hold office up to the date of the ensuing Annual General Meeting. The Company has received a notice in writing from a member proposing the candidature of Prof. Ashok Misra for the office of Director.

The Directors have reappointed, subject to the approval of members at the ensuing Annual General Meeting, Shri Hardev Singh Kohli and Shri Hital R. Meswani, both Wholetime Directors designated as Executive Directors of the Company, for a further period of 5 years from April 1, 2005 and August 4, 2005, respectively.

Shri Anil D.,Ambani, Vice Chairman and Managing Director, has resigned from the Board with effect from June 18, 2005. Your Directors place on record their deep appreciation for the invaluable contribution made by Shri Anil D. Ambani during his tenure as Director of the Company. Shri Anil D. Ambani has been associated with the Company since 1982 and has played a key role in building Reliance to its present pre-eminent position in the corporate world. Your Directors convey their best wishes to Shri Anil D. Ambani.

In terms of Article 155 of the Articles of Association of the Company, Shri H.R. Meswani, Shri R.H. Ambani and Shri S. Venkitaramanan, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.

Brief resume of the Directors proposed to be appointed/re-appointed, nature of their expertise in specific functional areas and names of companies in which they hold directorship and membership/chairmanship of Board committees, as stipulated under Clause 49 of Listing Agreement with the Stock Exchanges in India, are provided in the Report on Corporate Governance forming part of the Annual Report.

Directors' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2005 and of the profit of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a `going concern' basis.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates,-your Directors provide the audited Consolidated Financial Statements in the Annual Report.

Auditors and Auditors' Report

M/s. Chaturvedi & Shah, Chartered Accountants, and M/s. Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors have also proposed to appoint M/s. Deloitte Haskins and Sells, Chartered Accountants, as Auditors of the Company, subject to the approval of Members at the ensuing Annual General Meeting.

The Company has received letters from all of them to the effect that their appointment/re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment/re-appointment within the meaning of Section 226 of the said Act.

The notes on accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further comments.

Cost Auditors

The Central Government had directed an audit of the cost accounts maintained by the Company in respect of its Textiles, Polyester and Chemicals businesses. The Central Government has approved the appointments of Shri S.N. Bavadekar, Cost Accountant, for conducting the cost audit for the Textiles, Polyester and a part of Chemicals businesses and M/s. V.J. Talati & Co., Cost Accountants, for conducting the cost audit of a part of the Chemicals business for the financial year ended on March 31, 2005.

international Accountants

The report submitted to the Board of Directors by M/s. Deloitte Haskins and Sells, member firm of Deloitte Touche Tohmatsu (DTT), appointed as International Accountants of the Company, for the year under review, is provided in the Annual Report for information of Members.

Secretarial Audit

The Company voluntarily appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit of the Company for the financial year 2004-2005. The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Listing Agreement with the Stock Exchanges, Securities Contracts (Regulation) Act, 1956, and all the Regulations of Securities and Exchange Board of India (SEBI) as applicable to the Company, including the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and the SEBI (Prohibition of Insider Trading) Regulations, 1992.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange earnings and outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure to this Report.

Transfer of Unclaimed Dividend to IEPF

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, the declared dividend which remained unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the said Act.

Corporate Governance

During the year, your Board has constituted an independent Board Committee, named "Corporate Governance and Stakeholders' Interface Committee", to inter alia review the governance systems and processes followed by the Company, to suggest improvements, if any required in this area, and to recommend nomination of Directors on the Board.

The Company is committed to maintain the highest standards of Corporate Governance. Your Directors adhere to the requirements set by the Securities and Exchange Board of India's (SEBI) Corporate Governance practices and have implemented all the major stipulations prescribed. Your Company has also decided to implement several best practices, though not mandatory at present, as part of good Corporate Governance.

Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India forms part of the Annual Report.

Certificate from the Auditors of the Company, M/s. Chaturvedi & Shah, Chartered Accountants and M/s. Rajendra & Co., Chartered Accountants, confirming compliance of conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is annexed to this Report.

Acknowledgment

The Directors would like to express their grateful appreciation for the assistance and co-operation received from the Financial Institutions, Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the Executives, Staff and Workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani Chairman & Managing Director

Mumbai, June 28, 2005.

Annexure to Directors' Report

Particulars required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

(a) Energy Conservation measures taken

Improvement in energy efficiency is a continuous process at Reliance and conservation of energy is given a very high priority in all our plants and offices. Energy audits and benchmarking are done regularly to identify areas of improvement and steps are taken to implement the measures required for such improvement. According to the Energy Benchmarking Study for the year 2004, conducted by energy major Shell, our Refinery has the lowest corrected energy index and energy & loss index, indicating highest energy efficiency. Some of the major energy conservation measures carried out during the year are listed below:

1. Improvement in Power Plant energy efficiency by measures such as reduction in specific fuel consumption, replacement of copper ballast with electronic ballast and maintaining power factor close to unity.

2. Substitution of high-pressure steam with low-pressure steam in MEG Plant.

3. Transfer of excess residual heat from one fluid streams to other fluid streams for heating purposes, like transfer of heat from high boil product stream in VCM Plant, flash steam in PE Plant, hot recycle solvent in PE Plant, boiler blowdown in CPP, process steam in MEG Plant and process condensate in PTA Plant, to other streams.

4. Operational improvements like optimization of slurry mole ratios in all esterification areas in PSF Plant to reduce heat loads STG-1, baler motor optimization in PSF Draw line, APH modification from co-current to counter—current in PE plant, installation of P-Q control in GT power system, inlet air fogging in all gas turbines in CPP, optimization of feed tray location in Hiboil column in VCM, replacement of fin fan blades by hollow FRP blades in Crude, Coker Aromatics and PRU/SHP-TAME Plants, installation of new parallel fractionator overhead condenser in Coker Plant, installation of condensate pot for MEG column reboiler and installation of make up water heater in BHEL HRSGs in CPP.

(b) Additional Investment/proposals being implemented for reduction of consumption of Energy

1. In CPP Plant, proposals being implemented for energy conservation are reduction in back pressure in Gas turbines 1 and 2, stoppage of SHP letdown to 22K for HRSG 5/6/7, reduction in Plant & Instrument Air header

pressure in GT 1, installation of make up water heaters in all 4 other BHEL HRSGs and preheating CPP Deaerator make-up by Condensate return from Sulphur & Crude Units.

2. Measures being implemented in the Cracker Plant are-C3R compressor steam reduction by cold recovery from de-methaniser pre stripper column, dilutipn steam generator blowdown reduction by using an exchanger, and Fuel Gas Compressor suction pressure drop reduction.

3. Measures being implemented in the PP Plant are generation of LP Steam from HP condensate and stopping of one VGR compressor during HOMO grade run in both the lines .

4. Measures being implemented in the PSF Plant are-optimization of air cooled condenser fans, stoppage of three blowers by stoppage of creel 1 AHU, optimization of MP steam consumption during draw machine interruptions in steam draw chest in DM 1 - 4 and automatic changeover from Delta to Star for 75 KW motor in baler.

5. Measures being implemented in the Refinery are—increase in Crude Preheat temperature by heat recovery from VGO product stream as a result of detailed Pinch Study.

(c) Impact of measures at (a) & (b) above for reduction in consumption of energy and on the cost of production of goods.

1. As a result of various energy conservation measures taken, the Company saved energy equivalent to Rs 30 crore per annum.

2. The additional investment proposals being implemented for reduction in energy consumption have potential to reduce energy consumption equivalent to approximately Rs 100 crore per annum.

(d) Total Energy Consumption and Energy Consumption per unit of production as per Form `A' attached hereto.

B. TECHNOLOGY ABSORPTION

Efforts made in technology

absorption-as per Form B given below:

Form B

Form for disclosure of particulars with respect to absorption

1. Research and Development (R&D)

a. Specific areas in which the research and development (R&D) is being carried out

1. Morphologically controlled RELCAT100X developed at lab scale and pilot plant trial.

2. Magnesium alkoxide process developed and pilot plant trial for scale up.

3. Advance donor developed for PP catalyst to be used in homo grades for improvement in catalyst activity and product properties.

4. Bulk polymerization facility established for regular screening of catalyst.

5. Development of water-proof, all weather colour-fast fabrics for out door/tentage, all terrain, application.

6. Standardisation of Lycra-plied yarn manufacturing through assembly winding & two-for-one twisting process.

7. Development of Polyester-Wool-Rayon tri-blends fabrics through standardization of spinning, weaving & finishing processes.

8. Development & Standardization of bi-functional stain-release as well as stain-repellent eco-friendly finishes for Childrenwear fabrics fp; JnternationaJ Market.

9. Optimization of wool dyeing process by re-engineering sliver loading device to minimize wool-felting & waste.

10. Development of high abrasive-resistance woven jacquards specialty fabrics for uniform application.

b. Benefits derived as a result of R&D efforts

1. In-house development of PP catalyst system for performance & product characteristic improvement.

2. All weather tentage fabric shall create major opportunities as it intends to replace cotton cloth, which is not meeting with the finish requirement of the indented customer segment.

3. Standardisation of Lycra-plied yarn has resulted in improved finishing leading to better appearance of cloth.

4. Developed tropical and tri-blend Polyester-Wool-Rayon fabrics as a new product to create fresh demand and increased business.

5. Produced Power Teflon double defence mechanism blended fabrics against stains for childrenwear application.

6. Optimized wool dyeing techniques to minimize felting, reduce waste and-improved yields besides better finishing.

7. Developed high abrasion-resistance blended jacquard fabrics for apparel end use.

c. Future plan of action

1. Development of high performance catalyst for PP product/on.

2. Development of process for catalyst support.

3. Development of advanced donor and nucleating agents for polyolefin.

4. Technology development and commercialization of Titanium Dioxide product.

5. Development of tri-blend fabrics with Spandex Polyurethane filament yarn along with stain-repellent finishes.

6. Standardization of processing and finishing process of Polyester- Rayon blend fabrics using special scouring techniques.

7. Development of anti-felting and dimensionally stable wool & wool-blended fabrics by re-engineering yarn manufacturing & special finish application.

8. Development of specialty shirting fabrics using power stretch yarns for leisure & comfort.

9. Development of elastic fabrics along with water repellent . properties using various stretches yarns for medical application.

10.Development & optimization of Polyester-Wool-Rayon-Silk blended fabrics for up-market.

d. Expenditure on R & D

Rs. Crore

a) Capital 21.06 b) Recurring 40.26 Total 61.32 c) Total R & D expenditure as a percentage of total turnover 0.08

2. Technology Absorption, Adoption and Innovation

a. Efforts made towards technology absorption, adoption and innovation:

Imported technologies have been successfully absorbed resulting in high production level in operations. New product developments were also done to meet customer demand Technology innovations have been successfully implemented to increase production and reduce consumption of raw materials, catalysts, chemicals and utilities. Some such innovations are as under:

1. Cracked Gas Compressor stand alone cooling water system commissioned to reduce cooling water supply temperature by 2 deg C to CGC intercoolers thereby increasing ethylene production.

2. Expander-compressor unloading scheme commissioned in cracker plant to increase ethylene production.

3. Azeo-drying time reduced in Hiboil Column and VCM column in VCM plant.

4. EDC Cracking Furnace run-length improved in VCM plant by improving furnace feed EDC quality.

5. VCM Plant debottlenecking done for increase in plant capacity.

6. Use of high Selectivity EO catalyst and new design of EO reactor in MEG-1 plant instead of high activity catalyst for reduction of raw material consumption and CO2 generation.

7. Catacarb Technology in CO2 removal system introduced to increase the CO2 absorption efficiency and reduce CO2 concentration at the inlet of EO reactor to improve catalyst selectivity & run length.

8. Glycol section debottlenecking was done in-house. Capacity increased from 315 TPD to 350 TPD EOE.

9. New polyelectrolyte was developed for improved settleability of effluent water in ETP.

10. Recycling of PET flakes commissioned in PSF CP 8 unit for reduction of oligomer consumption.

b. Benefits Derived as a result of the above efforts

I. Product development/improvement and cost reduction

Capacity enhancement/new grade development/improvement and cost reduction has resulted in benefits of approximately Rs 75 crores per annum.

II. Import substitution

* Scheme for recovery of Cyclohexane was developed in-house and implemented to recover the cyclohexane from RB column bottom grease. Resulted in cyclohexane recovery of 1093 MT/annum & in turn reduction in import of cyclohexane by 1000 MTA yielding saving of Rs 3.4 crore per annum.

* Commercial production of PDEB started using in-house developed catalyst & process technology (by IPCL R&D and RIL Hz team) resulted in reduction in import by 700 MTA. Bottom line increase: Rs 4.5 crore per annum.

c. Information regarding Imported Technology

Product Technology from Year of Status of implementation/ Import absorption

Polyester Staple Dupont (U.S.A)/ 1998 Full Fibre Fill Chemtex U.S.A.

Paraxylene UOP Inter America Inc. 1999 Full U.S.A.

Polypropylene Union Carbide U.K. 1999 Full

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

1. Activities relating to export, initiatives to increase exports, Developments of New export markets for Products and Services and Export Plan.

The Company has continued to maintain focus and avail of export opportunities based on economic considerations. During the year the Company has exports (FOB value) worth Rs 23,741.33 crore (US$ 5427.21 million).

2. Total Foreign Exchange used and earned

Rs. Crore

a. Total Foreign Exchange earned 23,745.46

b. Total savings in Foreign Exchange 41,520.25 through products manufactured by the Company and deemed exports (US$ 9,491 million)

Sub total (a+b) 65,265.71

c. Total Foreign Exchange used 43,703.55

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