Mar 31, 2023
The Board of Directors present the Company''s Forty-sixth Annual Report (Post- IPO) and the Company''s audited financial statements for the financial year ended March 31, 2023.
Financial Results
The Company''s financial performance (standalone and consolidated) for the year ended March 31, 2023 is summarised below:
Standalone |
Consolidated |
|||||||
2022-23 |
2021-22 |
2022-23 |
2021-22 |
|||||
K crore |
US$ million* |
K crore |
US$ million* |
K crore |
US$ million* |
K crore |
US$ million* |
|
Profit Before Tax (Before Exceptional Items) |
54,133 |
6,588 |
45,396 |
5990 |
94,046 |
11,445 |
79,318 |
10,465 |
Current Tax |
(6,186) |
(753) |
(544) |
(72) |
(8,398) |
(1,022) |
(2,837) |
(374) |
Deferred Tax |
(4,930) |
(600) |
(6,915) |
(912) |
(11,978) |
(1,458) |
(13,133) |
(1,733) |
Profit from Continuing Operations (Before Exceptional Items) |
43,017 |
5,235 |
37,937 |
5,006 |
73,670 |
8,965 |
63,348 |
8,358 |
Exceptional Items (net of tax) A |
- |
- |
- |
- |
- |
- |
2,836 |
374 |
Profit from Continuing Operations |
43,017 |
5,235 |
37,937 |
5,006 |
73,670 |
8,965 |
66,184 |
8,732 |
Profit from Discontinued Operations (net of tax) |
1,188 |
145 |
1,147 |
151 |
418 |
51 |
1,661 |
219 |
Profit for the Year |
44,205 |
5,380 |
39,084 |
5,157 |
74,088 |
9,016 |
67,845 |
8,951 |
Net Profit attributable to Non-Controlling Interest |
- |
- |
- |
- |
(7,386) |
(899) |
(7,140) |
(942) |
Net Profit Attributable to Owners of the Company |
44,205 |
5,380 |
39,084 |
5,157 |
66,702 |
8,117 |
60,705 |
8,009 |
Balance in Retained Earnings |
72,545 |
10,981 |
41,893 |
6,937 |
2,47,951 |
33,919 |
1,96,059 |
27,073 |
Pursuant to Scheme of Arrangement # |
(23,502) |
(2,860) |
- |
- |
(21,867) |
(2,661) |
- |
- |
Transferred to statement of Profit & Loss A/c # |
- |
- |
- |
- |
(790) |
(96) |
- |
- |
Fresh issue of equity by subsidiaries # |
- |
- |
- |
- |
- |
- |
259 |
34 |
Sub-Total |
93,248 |
13,501 |
80,977 |
12,094 |
2,91,996 |
39,279 |
2,57,023 |
35,116 |
Appropriations |
||||||||
Transferred to Statutory Reserve |
- |
- |
- |
- |
(38) |
(5) |
(115) |
(15) |
Transferred to Debenture Redemption Reserve |
- |
- |
- |
- |
(96) |
(12) |
(524) |
(69) |
Transferred (to)/from Special Economic Zone Reinvestment Reserve |
8,960 |
1,090 |
(4,135) |
(546) |
8,960 |
1,090 |
(4,135) |
(546) |
Dividend on Equity Shares |
(5,083) |
(619) |
(4,297) |
(567) |
(5,083) |
(619) |
(4,297) |
(567) |
Closing Balance |
97,125 |
13,972 |
72,545 |
10,981 |
2,95,739 |
39,733 |
2,47,952 |
33,919 |
Figures in brackets represent deductions.
* 1 US$ = C 82.17 Exchange Rate as on March 31, 2023 (1 US$ = C 75.79 as on March 31, 2022).
A Refer Note 32 of the Standalone Financial Statement and Note 31 of the Consolidated Financial Statement.
# Refer Note 15 of the Standalone and Consolidated Financial Statements.
⢠Cash Profit for the year was
C 58,065 crore (US$ 71 billion)
⢠Net Profit for the year was C 43,017 crore (US$ 5.2 billion)
Consolidated
⢠Value of sales and services was
C 9,74,864 crore (US$ 118.6 billion)
⢠EBITDA for the year was C 1,53,920 crore (US$ 18.7 billion)
⢠Cash Profit for the year was
C 1,25,951 crore (US$ 15.3 billion)
⢠Net Profit for the year was C 73,670 crore (US$ 9.0 billion)
Results of operations and the state of Companyâs affairs
Highlights of the Companyâs financial performance for the year ended March 31, 2023 are as under:
Standalone
⢠Value of sales and services was
C 5,65,347 crore (US$ 68.8 billion)
⢠Exports for the year was C 3,40,048 crore (US$ 41.4 billion)
⢠EBITDA for the year was C 76,877 crore (US$ 9.4 billion)
Dividend
The Board of Directors have recommended a dividend of C 9/-(Rupees Nine only) per equity share of C 10/- (Rupees Ten) each fully paid-up of the Company (last year C 8/- per equity share of C 10/- each). Dividend is subject to approval of members at the ensuing Annual General Meeting and shall be subject to deduction of income tax at source.
The dividend recommended is in accordance with the Company''s Dividend Distribution Policy. The said policy of the Company is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/IRStatutory/Dividend-Distribution-Policy.pdf.
Details of material changes from the end of the financial year
Financial Services Demerger Scheme
The Board of Directors of the Company had approved the Scheme of Arrangement between the Company and its shareholders and creditors & Reliance Strategic Investments Limited ("RSILâ) (to be renamed as Jio Financial Services Limited) and its shareholders and creditors (Financial Services Demerger Scheme).
The Financial Services Demerger Scheme was approved by the shareholders and creditors of the Company. The Reserve Bank of India has granted its approval under the NBFC Regulations and the said Scheme has been sanctioned by the Hon''ble National Company Law Tribunal, Mumbai Bench, on June 28, 2023. The Financial Services Demerger Scheme became effective from July 1, 2023 and the Appointed Date was closing business hours of March 31, 2023.
Salient features of the Financial Services Demerger Scheme:
(a) demerger, transfer and vesting of the Financial Services Business (Demerged Undertaking as defined in the Financial Service Demerger Scheme) from the Company into RSIL on a going concern basis, and issue of 1 (one) fully paid-up equity share of RSIL having face value of C 10 (Rupees Ten) each for every 1 (one) fully paid-up equity share of C 10 (Rupees Ten) each of
the Company, in consideration thereof, in accordance with the provisions of Section 2(19AA) of the Income-tax Act, 1961, listing of equity shares of RSIL on BSE Limited and National Stock Exchange of India Limited; and
(b) reduction and cancellation of the entire pre-scheme share capital of RSIL.
July 20, 2023 was fixed as the Record Date for the purpose of
determining the equity shareholders of the Company entitled to receive the equity shares of RSIL. The equity shares of RSIL are expected to be listed soon.
Scheme of Amalgamation of Reliance New Energy Limited with the Company
The Board of Directors of the Company had approved the Scheme of Amalgamation of Reliance New Energy Limited (RNEL) with the Company & their respective shareholders (RNEL Scheme) for amalgamation of RNEL with the Company.
Based on a review of the new energy / renewable energy business and investment structure, the Board at its meeting held on April 21, 2023, decided that the new energy / renewable energy business should be undertaken through RNEL and the RNEL Scheme be withdrawn.
The Hon''ble National Company Law Tribunal, Mumbai Bench, vide its order dated June 07, 2023, approved withdrawal of the RNEL Scheme.
Material events during the year under review
EPC Scheme
The Board of Directors of the Company had approved the Scheme of Arrangement between Reliance Projects & Property Management Services Limited (RPPMSL) and its shareholders and creditors & the Company and its shareholders and creditors for demerger of the Digital EPC & Infrastructure business from RPPMSL into the Company . The Company has filed Company Scheme Petition with the Hon''ble National Company Law Tribunal, Mumbai Bench, and approval is awaited.
Receipt of fifth tranche on partly paid listed unsecured redeemable non-convertible debentures (PPD Series IA debentures)
During the year under review, the Company received payment of 5th tranche, aggregating C 160 crore, from the holders of PPD Series IA
debentures. The said funds have been utilised for repayment of existing borrowings and other purposes in the ordinary course of business. Consequent to the receipt of fifth tranche, PPD Series IA debentures have become fully paid-up.
Acquisition of Sintex Industries Limited
The Hon''ble National Company Law Tribunal, Ahmedabad Bench, approved the resolution plan jointly submitted by the Company and Assets Care & Reconstruction Enterprise Limited (in its capacity as trustee of the ACRE- 114 Trust) (ACRE) for acquisition of Sintex Industries Limited (SIL) under the Insolvency and Bankruptcy Code 2016. In accordance with the approved resolution plan, SIL is jointly controlled and managed by the Company and ACRE with effect from March 28, 2023. The Company holds 70% equity share capital of SIL.
Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulationsâ), is presented in a separate section, forming part of the Annual Report.
Business operations / performance of the Company and its major subsidiaries
Major developments and business performance of the Company and its major subsidiaries consolidated with the Company are given below:
Retail
Reliance Retail delivered robust performance with another year of strong revenue growth and profit performance. With focus on store network expansion, the business grew its store footprint across consumption baskets. The business continued
prices and improved price realisation for transportation fuels.
Increase in exports were led by higher price realisations despite lower downstream product volumes.
Access to global market and ability to place products to end consumers helped in realising better margins. Souring of advantageous crude/ feedstock from outside the region, given the volatility and constraints, lower fuel mix cost due to improved availability of gasifiers added to the margins. Introduction of SAED on transportation fuels adversely impacted earnings by C 6,648 crore on full year basis.
During the FY 22-23, O2C delivered revenue of C 5,94,650 crore and EBITDA of C 62,075 crore.
Oil & Gas (Exploration & Production)
Oil & Gas segment witnessed sharp improvement in Revenue & EBITDA with increased production and higher gas prices. EBITDA margin was up 950 bps led by improved realisation. Domestic production was at 10-year high.
MJ Field has started producing gas and condensate from Q1 FY 2023-24. All offshore installation and commissioning works have been completed.
Lower & Upper completion campaign for MJ wells is progressing as per plan. Seven wells have been completed and eighth well is expected to be completed in Q2 FY 2023-24.
Two e-auctions for sale of 6 MMSCMD & 5 MMSCMD gas from KGD6 were undertaken during the Q1 FY24. The entire volume was sold and Gas Sale Purchase Agreement (GSPA) signed with successful bidders.
With incremental gas production from MJ field, along with ongoing production from R Cluster and Satellite Cluster fields, Block KG D6 production is expected to reach ~30 MMSCMD in FY 2023-24.
Unified tariff regulations for gas pipelines has been implemented from April 1, 2023, which is expected to
to innovate, launch and scale up new retail formats to serve diverse customer segments.
The business recorded Gross Revenue of C 2,60,394 crore, a growth of 30.4% over last year driven by broad based growth across consumption baskets.
Digital Services segment achieved a record revenue of C 1,19,791 crore. Healthy growth in revenue from operations was led by full impact of tariff hike, continued subscriber addition for mobility services and ramp-up of wireline and digital services. Record EBITDA for the year was C 50,286 crore on account of higher revenue and steady improvement in margins.
Furthering its commitment to enable 5G for all, Jio extended coverage of its True5G services to over 2,300 cities/ towns across India as of March 2023. Jio users in these cities are invited to experience unlimited data with up to 1 Gbps speed under the Jio Welcome offer. Jio is on track to complete pan-India rollout by December 2023.
Consolidated revenue grew 6.4% amidst a weak revenue environment and economic headwinds. Despite the constrained marketing budgets of consumer companies and start-ups due to high inflation and funding crunch respectively, advertising revenue of the Company was flattish on a Y-o-Y basis. Withdrawal of Colors Rishtey from the Free-To-Air DD FreeDish platform also had an impact on the advertising revenue. Movie production segment delivered a strong slate of movies and sports vertical made a grand debut with properties like FIFA World Cup and Women''s Premier League (WPL), driving growth in revenue.
Oil to Chemicals (O2C) business delivered strong performance with tight fuels markets offsetting weak downstream chemical markets. Revenue increased by 18.7% on account of higher average crude oil benefit customers in far-flung areas and facilitate development of gas markets in India.
Credit Rating
The Company''s financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agencies. The details of credit ratings are disclosed in the Management Discussion and Analysis Report, which forms part of the Annual Report.
Consolidated Financial Statement
In accordance with the provisions of the Companies Act, 2013 ("the Actâ) and the Listing Regulations read with Ind AS 110-Consolidated Financial Statements, Ind AS 28-Investments in Associates and Joint Ventures and Ind AS 31-Interests in Joint Ventures, the consolidated audited financial statement forms part of the Annual Report.
Subsidiary, Joint Venture and Associate companies
During the year under review, companies listed in Annexure I to this Report have become and / or ceased to be the subsidiary, joint venture or associate of the Company.
A statement providing details of performance and salient features of the financial statements of Subsidiary / Associate / Joint Venture companies, as per Section 129(3) of the Act, is provided as Annexure A to the consolidated financial statement and therefore not repeated in this Report to avoid duplication.
The audited financial statement including the consolidated financial statement of the Company and all other documents required to be attached thereto is available on the Company''s website and can be accessed at https://www.ril.com/ ar2022-23/pdf/RIL-Integrated-Annual-Report-2022-23.pdf The financial statements of the subsidiaries, are available on the Company''s website and can be accessed at https://www. ril.com/InvestorRelations/Downloads. aspx.
The Company has formulated a Policy for determining Material Subsidiaries. The Policy is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/IRStatutory/Material-Subsidiaries.pdf.
During the year under review, Jio Platforms Limited, Reliance Jio Infocomm Limited, Reliance Retail Limited, Reliance Retail Ventures Limited and Reliance Global Energy Services (Singapore) Pte. Limited were material subsidiaries of the Company as per the Listing Regulations.
Secretarial Standards
The Company has followed the applicable Secretarial Standards, with respect to Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India.
Directorsâ Responsibility Statement
Your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31, 2023, 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, 2023 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 governance and has also implemented several best governance practices.
The report on Corporate Governance as per the Listing Regulations forms part of the Annual Report. 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 & Sustainability Report
In accordance with the Listing Regulations, the Business Responsibility & Sustainability Report (BRSR) describing the initiatives taken by the Company from an environmental, social and governance perspective is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/BRSR2022-23.pdf.
Contracts or arrangements with Related Parties
During the year under review:
a) all contracts / arrangements / transactions entered by the Company with related parties were in its ordinary course
of business and on an arm''s length basis;
b) contracts / arrangements / transactions which were material, were entered into with related parties in accordance with the
Policy of the Company on Materiality of Related Party Transactions and on dealing with Related Party Transactions. The Company had not entered into any contract / arrangement / transaction with related parties which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/IRStatutory/Policy-on-Materiality-of-RPT.pdf.
There were no materially significant related party transactions which could have potential conflict with the interests of the Company at large.
Members may refer to Note 35 of the Standalone Financial Statement which sets out related party disclosures pursuant to Ind AS.
Corporate Social Responsibility (CSR)
The Company has focused on several corporate social responsibility programs. The CSR initiatives of the Company under the leadership of Smt. Nita M. Ambani, Founder and Chairperson, Reliance Foundation, have touched the lives of more than 6.95 crore people covering more than 54,200 villages and several urban locations across India since 2010.
As per the CSR Policy, the Company continues its endeavors to improve the lives of people and provide opportunities for their holistic development through its different initiatives in the areas of Rural Transformation, Health, Education, Sports for Development, Women Empowerment, Disaster Management, Arts, Culture & Heritage and Environment. The three core commitments of Scale, Impact and Sustainability, with a focus on environment form the bedrock
of the Company''s philosophy on CSR initiatives.
The Company through its various CSR initiatives, has aligned with various national priority initiatives including the Gram Uday Se Bharat Uday Abhiyan, Unnat Bharat Abhiyan, Swachh Bharat Abhiyan, POSHAN Abhiyan, Jal Shakti Abhiyan, Sabki Yojana Sabka Vikas, Skill India Mission Har Ghar Tiranga campaign, Digital India and Doubling Farmers'' Income.
The CSR initiatives of the Company have won several awards including Golden Peacock Award for Corporate Social Responsibility 2022, Best CSR at Digital Enabler Award, Economic Times Best Healthcare Brand Awards 2022 for Sir H. N. Reliance Foundation Hospital, FE Healthcare Summit & Awards 2022, Times Health Leaders Awards 2022 for Sir H. N. Reliance Foundation Hospital, Olive Crown Award for green initiatives by Reliance Foundation and Socio CSR Award for Reliance Foundation''s video film on women and technology, among others.
The CSR policy, formulated by the Corporate Social Responsibility and Governance ("CSR&Gâ) Committee and approved by the Board, continues to be unchanged. The policy can be accessed at https://www.ril.com/ DownloadFiles/IRStatutory/CSR-Policy.pdf.
During the year under review, the Company spent C 744 crore (2.01% of the average net profits of the preceding three financial years), towards identified and approved CSR initiatives covered under Schedule VII of the Companies Act 2013, directly/ through the implementing agencies.
The Annual Report on CSR activities including summary of Impact Assessment Report is annexed and marked as Annexure II to this Report.
The Company has a structured Group Risk Management Framework, designed to identify, assess and mitigate risks appropriately. The Risk Management Committee has been entrusted with the responsibility to assist the Board in:
a) overseeing and approving the Company''s enterprise wide risk management framework;
b) ensuring that all material Strategic and Commercial risks including Cybersecurity, Safety and Operations, Compliance, Control and Financial risks have been identified and assessed; and
c) ensuring that all adequate risk mitigation measures are in place, to address these risks.
Further details on the risk management activities including the implementation of risk management policy, key risks identified and their mitigations are covered in Management Discussion and Analysis section, which forms part of the Annual Report.
The key internal financial controls have been documented, automated wherever possible and embedded in the respective business processes.
Assurance to the Board on the effectiveness of internal financial controls is obtained through 3 Lines of Defence which include:
a) Management reviews and selfassessment;
b) Continuous controls monitoring by functional experts; and
c) Independent design and operational testing by the Group Internal Audit function.
The Company believes that these systems provide reasonable assurance that the Company''s internal financial controls are adequate and are operating effectively as intended.
Directors and Key Managerial Personnel
In accordance with the provisions of the Act and the Articles of Association of the Company, Shri P.M.S. Prasad and Shri Nikhil R. Meswani, Directors of the Company, retire by rotation at the ensuing Annual General Meeting. The Board of Directors, based on the recommendation of the Human Resources, Nomination and Remuneration ("HRNRâ)
Committee, has recommended their re-appointment.
Prof. Dipak C. Jain and Dr. Raghunath A. Mashelkar ceased to be Directors of the Company upon completion of their term on July 20, 2022. The Board places on record its sincere appreciation for the contribution made by them during their tenure on the Board of the Company.
The HRNR Committee, at its meeting held on July 15, 2022, considered and recommended the appointment of Shri K. V. Chowdary as an Independent Director of the Company. Upon such recommendation, Shri K. V. Chowdary resigned as a non-independent director of the Company with effect from the close of business hours on July 20, 2022. The Board of Directors subsequently approved the appointment of Shri K. V. Chowdary as an Additional Director, designated as an Independent Director of the Company, with effect from July 21, 2022 and at the annual general meeting of the Company held on August 29, 2022, the shareholders approved his appointment as an Independent Director of the Company for a period of 5 years upto July 20, 2027
The Board of Directors based on the recommendation of the HRNR Committee, recommended appointment of Shri K. V. Kamath as an Independent Director of the Company for a term of 5 (five) consecutive years and the shareholders of the Company approved his appointment on December 30, 2022. The tenure of Shri K.V. Kamath as an Independent Director of the Company is up to January 19, 2028.
In the opinion of the Board,
Shri K. V. Chowdary and Shri K.V. Kamath possess requisite expertise, integrity and experience (including proficiency).
Shri Alok Agarwal, accomplished finance professional, assumed a new role as Senior Advisor to the Chairman and Managing Director of the Company, assisting him on a wide range of strategic issues with effect from June 1, 2023, after 30 years of distinguished service.
He was appointed as the Chief Financial Officer of the Company in 2005. He joined Reliance in 1993 and was responsible for finance, banking relationships and capital market transactions.
The Board appreciates the contribution made by Shri Alok Agarwal in the transformative journey of the Company.
The Board of Directors of the Company, based on the recommendation of the HRNR Committee, designated Shri Srikanth Venkatachari as the Chief Financial Officer of the Company with effect from June 1, 2023. He was the Joint Chief Financial Officer of the Company since 2011.
Shri Pawan Kumar Kapil completed his 5-year term as a whole-time director of the Company, on May 15, 2023. Upon completion of his term, he also ceased to be a Director of the Company.
The Board places on record its sincere appreciation for the contribution made by Shri Pawan Kumar Kapil during his long tenure on the Board of the Company.
Given his vast experience of around 56 years in the field of hydrocarbons and long tenure with the Company, he continues to be associated with the Company.
The Company has received declarations from all the Independent Directors of the Company confirming that:
a) they meet the criteria of independence prescribed under the Act and the Listing Regulations; and
b) they have registered their names in the Independent Directors'' Databank.
The Company has devised, inter alia, the following policies viz.:
a) Policy for selection of Directors and determining Directors'' independence; and
b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.
The aforesaid policies are available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/IRStatutory/Policy-for-Selection-of-Directors.pdf and https://www.ril.com/DownloadFiles/ IRStatutory/Remuneration-Policy-for-Directors.pdf
The Policy for selection of Directors and determining Directors'' independence sets out the guiding principles for the HRNR Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, while considering their appointment as Independent Director of the Company. The Policy also provides for the factors in evaluating the suitability of individual board members with diverse background and experience that are relevant for the Company''s operations. There has been no change in the policy during the year under review.
The Company''s remuneration policy is directed towards rewarding performance based on review of achievements. The remuneration policy is in consonance with existing industry practice. There has been no change in the policy during the year under review.
The Company has a policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which includes criteria for performance evaluation of Non-Executive Directors and Executive Directors.
In accordance with the manner of evaluation specified by the HRNR Committee, the Board carried out annual performance evaluation of the Board, its Committees and Individual Directors. The Independent Directors carried out annual performance evaluation of the Chairman, the non-independent directors and the Board as a whole. The Chairman of the respective Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was
evaluated by the Board based on the report of evaluation received from the respective Committees.
A consolidated report was shared with the Chairman of the Board for his review and giving feedback to each Director.
Employeesâ Stock Option Scheme
The HRNR Committee, through RIL ESOS 2017 Trust inter alia administers and monitors Reliance Industries Limited Employees'' Stock Option Scheme 2017 ("ESOS-2017â).
The ESOS-2017 is in line with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations,
2021 ("SBEB Regulationsâ). The details as required to be disclosed under the SBEB Regulations can be accessed at https://www.ril.com/ DownloadFiles/IRStatutory/ESOS-2017-Disclosure-2022-23.pdf.
Auditors and Auditorsâ Report
Deloitte Haskins & Sells LLP,
Chartered Accountants and Chaturvedi & Shah LLP, Chartered Accountants, were appointed as the Auditors of the Company for a term of 5 (five) consecutive years, at the 45th Annual General Meeting (Post-IPO) held on August 29, 2022. The Auditors have confirmed that they are not disqualified from continuing as the Auditors of the Company.
The Auditors'' Report does not contain any qualification, reservation, adverse remark or disclaimer. The Notes to the financial statements referred in the Auditors'' Report are selfexplanatory and do not call for any further comments.
The Board has appointed the following Cost Accountants as Cost Auditors for conducting the audit of cost records of products and services of the Company for various segments for the FY 2023-24 under Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014:
i. Textiles Business - Kiran J.
Mehta & Co.
ii. Chemicals Business - Diwanji & Associates, K.G. Goyal & Associates, V.J. Talati & Co., Suresh D. Shenoy, Shome & Banerjee and Dilip M. Malkar & Co.;
iii. Polyester Business - K.G. Goyal & Associates, V.J. Talati & Co., Suresh D. Shenoy and V. Kumar & Associates;
iv. Electricity Generation - Diwanji & Associates, and Kiran J. Mehta & Co.;
v. Petroleum Business - Suresh D. Shenoy;
vi. Oil & Gas Business - V.J. Talati & Co. and Shome & Banerjee;
vii. Gasification (for petroleum activities) - Suresh D.
Shenoy; and
viii. Composites Solution - Kiran J. Mehta & Co.
Shome & Banerjee, Cost Accountants, have been nominated as the Company''s Lead Cost Auditor.
In accordance with the provisions of Section 148(1) of the Act, read with the Companies (Cost Records and Audit) Rules, 2014, the Company has maintained cost records.
Secretarial Auditor
The Board had appointed Dr. K.R. Chandratre, Practising Company Secretary, to conduct Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended March 31, 2023 is annexed and marked as Annexure III to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.
Meetings of the Board
Six meetings of the Board of Directors were held during the year. The particulars of the meetings held and attendance of each Director are detailed in the Corporate Governance Report.
Audit Committee
During the year under review,
Dr. Raghunath A. Mashelkar ceased to be a Director of the Company upon completion of his term and consequently ceased to be a member of the Audit Committee. The Audit Committee presently comprises Shri Raminder Singh Gujral (Chairman), Shri Adil Zainulbhai and Shri K. V. Chowdary. All the recommendations made by the Audit Committee were accepted by the Board.
Human Resources, Nomination and Remuneration (HRNR) Committee
During the year under review,
Dr. Raghunath A. Mashelkar ceased to be a Director of the Company upon completion of his term and consequently ceased to be a member of the HRNR Committee. The HRNR Committee presently comprises Shri Adil Zainulbhai (Chairman),
Shri Raminder Singh Gujral,
Dr. Shumeet Banerji and Shri K. V. Chowdary.
Corporate Social Responsibility and Governance (CSR&G) Committee
During the year under review,
Dr. Raghunath A. Mashelkar ceased to be a Director of the Company upon completion of his term and consequently ceased to be the Chairman and member of the CSR&G Committee. The CSR&G Committee presently comprises Dr. Shumeet Banerji (Chairman),
Shri Nikhil R. Meswani and Shri K. V. Chowdary.
Environmental, Social and Governance (ESG) Committee
During the year under review,
Shri Pawan Kumar Kapil ceased to be a Director of the Company and consequently ceased to be a member of the ESG Committee.
The ESG Committee presently comprises Shri Hital R. Meswani (Chairman), Shri P.M.S. Prasad and Smt. Arundhati Bhattacharya.
Stakeholdersâ Relationship (SR) Committee
The SR Committee comprises Shri K. V. Chowdary (Chairman),
Smt. Arundhati Bhattacharya,
Shri Nikhil R. Meswani and Shri Hital R. Meswani.
Risk Management (RM) Committee
The RM Committee comprises Shri Adil Zainulbhai (Chairman),
Dr. Shumeet Banerji, Shri K. V. Chowdary, Shri Hital R. Meswani,
Shri PM.S. Prasad, Shri Alok Agarwal and Shri Srikanth Venkatachari.
Vigil Mechanism and Whistleblower Policy
The Company has established a robust Vigil Mechanism and a Whistleblower Policy in accordance with the provisions of the Act and the Listing Regulations. Ethics & Compliance Task Force (ECTF) comprising Executive Director, General Counsel, Group Controller and Group Corporate Secretarial and Governance has been established which oversees and monitors the implementation of ethical business practices in the Company. ECTF evaluates incidents of suspected or actual violations of the Code of Conduct and reports them to the Audit Committee every quarter.
Employees and other stakeholders are required to report actual or suspected violations of applicable laws and regulations and the Code of Conduct. Such genuine concerns (termed Reportable Matter) disclosed as per Policy are called "Protected Disclosuresâ and can be raised by a Whistle-blower through an e-mail or dedicated telephone line or a letter to the ECTF or to the Chairman of the Audit Committee. The Vigil Mechanism and Whistle-blower Policy is available on the Company''s website and can be accessed at https://www. ril.com/DownloadFiles/IRStatutory/ Vigil-Mechanism-and-Whistle-Blower-Policy.pdf.
Prevention of sexual harassment at workplace
In accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ("POSH Actâ) and the Rules made thereunder, the Company has in place a policy which mandates no tolerance against any conduct amounting to sexual harassment of women at workplace. The Company has constituted Internal Complaints Committee(s) (ICCs) to redress and resolve any complaints arising under the POSH Act. Training / awareness programme are conducted throughout the year to create sensitivity towards ensuring respectable workplace.
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 provided is proposed to be utilised by the recipient are provided in the Standalone Financial Statement (Please refer Note 2, 3, 7, 10, 35 and 41 to the Standalone Financial Statement).
Conservation of energy, technology absorption, 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 IV to this Report.
Annual Return
The Annual Return of the Company as on March 31, 2023 is available on the Company''s website and can be accessed at https://www.ril. com/DownloadFiles/IRStatutory/ AnnualReturn-2022-23.pdf.
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 of the top ten employees in terms of remuneration drawn and names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules 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 forms part of this Report.
Having regard to the provisions of the second 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. Any member interested in obtaining such information may address their email to rilagmeril.com
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters 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 Options Scheme referred to in this Report.
⢠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.
⢠There has been no change in the nature of business of the Company.
⢠There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.
⢠There was no instance of one-time settlement with any Bank or Financial Institution.
The Board places on record its deep sense of appreciation for the committed services by all the employees of the Company. The Board of Directors would also like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, government and regulatory authorities, stock exchanges, customers, vendors, members, debenture holders and debenture trustee during the year under review.
For and on behalf of the Board of Directors
Mukesh D. Ambani
Chairman and Managing Director Mumbai, July 21, 2023
Mar 31, 2022
The Board of Directors present the Company''s Forty-fifth Annual Report (Post- IPO) and the Company''s audited financial statements for the financial year ended March 31, 2022.
Financial Results
The Company''s financial performance (standalone and consolidated) for the year ended March 31, 2022 is summarised below:
Standalone |
Consolidated |
|||||||
2021-22 |
2020-21 |
202 |
-22 |
2020-21 |
||||
'' crore |
US$ million* |
'' crore |
US$ million* |
'' crore |
US$ million* |
'' crore |
US$ million* |
|
Profit Before Tax (Before Exceptional Items) |
46,786 |
6,173 |
22,908 |
3,133 |
81,306 |
10,727 |
49,819 |
6,814 |
Current Tax |
787 |
104 |
- |
- |
3,161 |
417 |
(2,205) |
(302) |
Deferred Tax |
6,915 |
912 |
4,732 |
647 |
13,136 |
1,733 |
483 |
66 |
Profit For The Year (Before Exceptional Items) |
39,084 |
5,157 |
27,640 |
3,780 |
65,009 |
8,577 |
48,097 |
6,578 |
Exceptional Items (net of tax) a |
- |
- |
4,304 |
589 |
2,836 |
374 |
5,642 |
772 |
Profit For The Year |
39,084 |
5,157 |
31,944 |
4,369 |
67,845 |
8,951 |
53,739 |
7,350 |
Net Profit attributable to Non-Controlling Interest |
- |
- |
- |
- |
(7,140) |
(942) |
(4,611) |
(631) |
Net Profit Attributable to Owners of the Company |
39,084 |
5,157 |
31,944 |
4,369 |
60,705 |
8,009 |
49,128 |
6,719 |
Balance in Retained Earnings |
41,893 |
6,937 |
14,146 |
3,141 |
1,96,059 |
27,073 |
32,972 |
4,766 |
Pursuant to Scheme of Arrangement # |
- |
- |
32,416 |
4,434 |
- |
- |
(728) |
(99) |
Fresh issue of equity by subsidiaries # |
- |
- |
- |
- |
259 |
34 |
1,18,170 |
16,163 |
Sub-Total |
80,977 |
12,094 |
78,506 |
11,944 |
2,57,023 |
35,116 |
1,99,542 |
27,549 |
Appropriations |
||||||||
Transferred to Statutory Reserve |
- |
- |
- |
- |
(115) |
(15) |
(128) |
(18) |
Transferred to Profit & Loss A/c a |
(33,217) |
(4,543) |
- |
- |
- |
- |
||
Transferred (to)/from Debenture Redemption Reserve |
- |
- |
- |
- |
(524) |
(69) |
41 |
6 |
Transferred (to)/from Special Economic Zone Reinvestment Reserve |
(4,135) |
(546) |
525 |
72 |
(4,135) |
(546) |
525 |
72 |
Dividend on Equity Shares |
(4,297) |
(567) |
(3,921) |
(536) |
(4,297) |
(567) |
(3,921) |
(536) |
Closing Balance |
72,545 |
10,981 |
41,893 |
6,937 |
2,47,952 |
33,919 |
1,96,059 |
27,073 |
Figures in brackets represent deductions.
* 1 US$ = '' 75.7925 Exchange Rate as on March 31, 2022 (1 US$ = ''73.11 as on March 31, 2021).
a Refer Note 32 of the Standalone Financial Statement and Note 31 of the Consolidated Financial Statement.
# Refer Note 15 of the Standalone and Consolidated Financial Statements.
Issue of Senior Unsecured Notes
During the year under review, the Company has issued fixed rate senior unsecured notes for an aggregate amount of US$ 4 billion across three tranches. The proceeds from the issuance of the Notes have been utilised primarily for refinancing of existing borrowings, in accordance with the applicable law.
Scheme of Arrangement between the Company and Reliance Syngas Limited
The Board of Directors of the Company had approved the Scheme of Arrangement between (i) the Company & its shareholders and creditors and (ii) Reliance Syngas Limited & its shareholders and creditors ("Gasification Scheme"). The Gasification Scheme, inter alia, provides for transfer of the Gasification undertaking (as defined in the Gasification Scheme) from the Company to Reliance Syngas Limited, a wholly owned subsidiary of the Company, as a going concern on slump sale basis for a lump sum consideration on the terms and conditions as detailed in the Gasification Scheme.
The Gasification Scheme was approved by:
a. the Shareholders and Creditors of the Company on March 9, 2022; and
b. the Hon''ble National Company Law Tribunal, Mumbai Bench and Ahmedabad Bench on March 30, 2022.
The Appointed Date of the Gasificatior Scheme is March 31, 2022 and the Gasification Scheme became effective from April 4, 2022.
Withdrawal of the Scheme of Arrangement between the Company and Reliance O2C Limited
During the year under review, the Company and Saudi Aramco mutual! determined that it would be beneficia for both the parties to re-evaluate the
Results of operations and the state of Companyâs affairs
Highlights of the Companyâs financial performance for the year ended March 31, 2022 are as under:
Standalone
⢠Value of sales and services was '' 4,66,425 crore (US$ 61.5 billion)
⢠Exports for the year was '' 2,54,970 crore (US$ 33.6 billion)
⢠EBITDA for the year was '' 66,185 crore (US$ 8.7 billion)
⢠Cash Profit for the year was '' 56,275 crore (US$ 7.4 billion)
⢠Net Profit for the year was at '' 39,084 crore (US$ 5.2 billion)
Consolidated
⢠Value of sales and services was '' 7,92,756 crore (US$ 104.6 billion)
⢠EBITDA for the year was '' 1,25,687 crore (US$ 16.6 billion)
⢠Cash Profit for the year was '' 1,10,778 crore (US$ 14.6 billion)
⢠Net Profit for the year was at '' 67,845 crore (US$ 9.0 billion)
The Board of Directors has recommended a dividend of '' 8/-(Rupees eight only) per equity share of '' 10/- (Ten rupees) each fully paid-up of the Company (last year '' 7 per equity share of '' 10/- each). Dividend is subject to approval of members at the ensuing Annual General Meeting
and shall be subject to deduction of income tax at source.
The dividend recommended is in accordance with the Company''s Dividend Distribution Policy. The Dividend Distribution Policy of the Company is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/IRStatutory/Dividend-Distribution-Policy.pdf
Details of material changes from the end of the financial year
The continuance of corona virus (COVID-19) pandemic globally and in India is causing significant
disturbance and slowdown of economic activity. The operations and revenue were impacted due to COVID-19. During the year under review, there is no significant impact of COVID-19 on the operations of the Company.
Material events during the year under review Receipt of First call and Second and Final call on partly paid-up equity shares issued on Rights Basis
During the FY 2020-21, the Company had issued and allotted 42,26,26,894 partly paid-up equity shares of '' 10/-each, on rights basis, at an issue price of '' 1,257/- per fully paid-up equity share (including a premium of '' 1,247/- per equity share). An amount equivalent to 25% of the issue price viz. '' 314.25 per equity share was received on application.
During the year under review, the First Call of '' 314.25 per partly paid-up equity share was payable from May 17, 2021 to May 31, 2021. The Second and Final call of '' 628.50 per partly paid-up equity share was payable from November 15, 2021 to November 29, 2021. An amount of '' 81 crore, towards call money, is yet to be received as on March 31, 2022.
The funds received pursuant to Rights Issue, have been utilised for the objects stated in the Letter of Offer dated May 15, 2020, towards repayment of certain borrowings of the Company and general corporate purposes.
Receipt of fourth tranche on partly paid listed unsecured redeemable non-convertible debentures (PPD Series-IA)
During the year under review, the Company received payment of 4th tranche, aggregating '' 250 crore, from the holders of PPD Series IA. The said funds have been utilised for repayment of existing borrowings and other purposes in the ordinary course of business.
proposed investment in O2C business in light of the changed context, due to evolving nature of the Company''s business portfolio.
The Board of Directors of the Company had on November 19, 2021, approved withdrawal of the Scheme of Arrangement between the Company and Reliance O2C Limited ("O2C Scheme") from Hon''ble National Company Law Tribunal ("NCLT"). NCLT, Mumbai Bench has vide its order dated December 3, 2021 approved the withdrawal of the O2C Scheme.
Reclassification of Reliance Industrial Infrastructure Limited
Reliance Industrial Infrastructure Limited was reclassified from the category of ''Promoter Group'' of the Company to ''Public''.
Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review, as stipulated under 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.
Business Operations / Performance of the Company and its major subsidiaries
Major developments and business performance of the Company and its major subsidiaries consolidated with the Company are given below:
Retail
Retail segment delivered an all-time-high revenue & profit, driven by highest ever store sales and sustained growth momentum in digital & new commerce. The business ensured continuity of operations and safety of its employees and their families through double vaccination. The business strengthened its competencies across brands, supply
Blockchain, IoT, Mixed Reality, AI / ML, Secure Identity and Natural Language Processing, among others.
Media and Entertainment
The business posted highest ever consolidated operating profit and margins with continued improvement in news business profitability and strong margins in entertainment business. This was despite the challenging business environment at the beginning and end of the year due to the pandemic wave and global macro events, respectively. During the FY 2021-22, Network18 reported value of services of '' 6,831 crore (growth of 25.1% Y-o-Y) and an all-time-high EBITDA of '' 1,080 crore (growth of 35.7% Y-o-Y). The improvement in profitability is a result of strong operating performance driving revenue growth across businesses, accompanied by continued cost controls.
Oil to Chemicals
The Oil to Chemicals (O2C) business delivered strong performance on the back of recovery in global demand, robust global economic recovery, rising vaccination rates and easing social distancing measures. In FY 2021-22, the Company remained among the largest producers of transportation fuels, exporting 34.7 MMT of products across the globe to meet most stringent US specifications. The downstream products also delivered robust growth, surpassing its pre-pandemic level business performance on the back of leveraging high level of integration from feedstock to finished goods, strong global business networks, multi-modal logistics capabilities and enhanced digital capability with all stakeholders across the value chain.
Overall production meant for sale increased from 63.6 MMT to 68.2 MMT. The business achieved near full capacity utilisation despite several waves of COVID-19 and also processed 10 new crudes during the year.
Revenues for the O2C business increased by 56.5% on account of increase in crude prices and higher volumes. The segment performance
Secretarial Standards
The Company has followed the
applicable Secretarial Standards, i.e.
SS-1 and SS-2, relating to ''Meetings of
the Board of Directors'' and ''General
Meetings'', respectively.
Directorsâ Responsibility Statement
Your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31, 2022, 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, 2022 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.
chain and technology, through a number of acquisitions and formed strategic relationships with key players and market innovators.
The business achieved a revenue of '' 1,99,749 crore and an all-time-high EBITDA of '' 12,423 crore for the FY 2021-22 as operating environment returned to near normalcy.
Digital Services
Digital services segment achieved revenue of '' 1,00,161 crore, an increase of 10.9% Y-o-Y and EBITDA of '' 40,268 crore, a growth of 18.3% Y-o-Y. Customer engagement on the Jio network increased further with average per capita data and voice usage at 19.7 GB and 968 minutes per month for the quarter ended March 2022.
Jio''s network carried almost 10% of the global mobile data traffic in 2021, and Jio continues to remain the broadband network of choice with over 50% share of India''s data traffic, thereby underlining the ''Jio effect'' on the digital ecosystem in India. Jio was the digital lifeline during the continuing pandemic and over 130 million new users joined the network on a gross basis during FY 2021-22.
Reliance Jio Infocomm Limited (RJIL) has now also become the largest fiber broadband provider with over 5 million connected homes with an average data usage of almost 300 GB per home per month. Jio has continued to rollout last mile infrastructure at an elevated pace and now has almost 20 million homes passed on its network.
Jio''s consumer platforms include apps and services in Media, Commerce, Education, Financial Services, IoT offering personalized content in easily discoverable format with intuitive UI. Leveraging its technology investments and customer engagement, Jio has indigenously developed and launched consumer applications and use cases. Jio''s in-house R&D team, with over 9,000 technical and research professionals, has innovated and developed leading technology platforms spanning 5G stack, Cloud and Edge Compute, Devices & Operating Systems,
was primarily driven by better transportation fuel cracks due to robust consumption on improved road mobility as COVID restrictions eased and increasing international travel with more countries re-opening their borders. During the FY 2021-22,
O2C business reported revenue of '' 5,00,900 crore and EBITDA of '' 52,722 crore.
Oil and Gas (Exploration & Production)
Revenue for Oil and Gas (Exploration & Production) business for the year increased by 250.1% Y-o-Y to '' 7,492 crore primarily due to ramp-up of gas production from KG D6 and improved price realization. EBITDA for the year, sharply increased to '' 5,457 crore, with EBITDA margin of 72.8%. Satellite Cluster Field was commissioned in April 2021, two months ahead of schedule despite COVID-19 challenges. All five wells have been opened, tested and ramped up, achieving a peak production of 6 MMSCMD. Together, the R Cluster and Satellite Cluster fields are currently producing â18.9 MMSCMD and contributing â20% of India''s domestic gas production.
During the year, Reliance Eagleford Upstream Holding, LP (REUHLP) a wholly owned step-down subsidiary of the Company, signed an agreement with Ensign Operating III, LLC to divest its interest in certain upstream assets in the Eagleford shale play of Texas, USA. With this transaction, the Company has divested all its shale gas assets and exited from the shale gas business in the US.
Credit Rating
The Company''s financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agencies. The details of credit ratings are disclosed in the Management Discussion and Analysis Report, which forms part of the Annual Report.
Consolidated Financial Statement
In accordance with the provisions of the Companies Act, 2013 ("the Act")
and the Listing Regulations read with Ind AS-110-Consolidated Financial Statement, Ind AS-28-Investments in Associates and Joint Ventures and Ind AS-31-Interests in Joint Ventures, the consolidated audited financial statement forms part of the Annual Report.
Subsidiaries, Joint Ventures and Associate Companies
During the year under review, companies listed in Annexure I to this Report have become and / or ceased to be the Company''s subsidiaries, joint ventures or associate companies.
A statement providing details of performance and salient features of the financial statements of Subsidiary / Associate / Joint Venture companies, as per Section 129(3) of the Act, is provided as Annexure A to the consolidated financial statement and therefore not repeated in this Report to avoid duplication.
The audited financial statement including the consolidated financial statement of the Company and all other documents required to be attached thereto is available on the Company''s website and can be accessed at https://www.ril.com/ ar2021-22/pdf/RIL-Integrated-Annual-Report-2021-22.pdf. The financial statements of the subsidiaries, as required, are available on the Company''s website and can be accessed at https://www.ril.com/ InvestorRelations/Downloads.aspx.
The Company has formulated a Policy for determining Material Subsidiaries. The Policy is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/IRStatutory/Material-Subsidiaries.pdf
Reliance Retail Limited, Jio Platforms Limited, Reliance Jio Infocomm Limited and Reliance Retail Ventures Limited are material subsidiaries of the Company, as per the Listing Regulations.
Corporate Governance
The Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set out by the Securities and Exchange Board of India ("SEBI"). The Company has also implemented several best governance practices.
The report on Corporate Governance as stipulated under the Listing Regulations forms part of the Annual Report. 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
In accordance with the Listing Regulations, the Business Responsibility Report (BRR) describing the initiatives taken by the Company from an environmental, social and governance perspective is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/BRR2021-22.pdf
Contracts or arrangements with Related Parties
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in its ordinary course of business and on an arm''s length basis. During the year under review, 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 or which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Company''s website and can
from zero to 11% of India''s treatment needs for meeting the requirement of over one lakh patients every day. This was supplied free to several State Governments.
The Company supported national initiatives like Gram Uday Se Bharat Uday Abhiyan, Unnat Bharat Abhiyan, Swachh Bharat Abhiyan, Poshan Abhiyan, Jal Shakti Abhiyan, Sabki Yojana Sabka Vikas, Skill India Mission, Digital India and Doubling Farmers'' Income.
The CSR initiatives of the Company have won several awards including Golden Peacock Award for Corporate Social Responsibility 2021, CII DX Award 2021 under ''Innovation in CSR through Digital Transformation,'' Award for Corporate Leadership in ESG (Environmental, Social & Governance) from The CSR Journal- Excellence Awards 2021, World Summit Awards 2021 for providing digital solutions through its Machli App and the Best Vaccine Programme by a Private Hospital at the India Today Healthgiri awards among others.
The CSR policy, formulated by the Corporate Social Responsibility and Governance ("CSR&G") Committee and approved by the Board, continues unchanged. The policy can be accessed at https:// www.ril.com/DownloadFiles/ IRStatutory/CSR-Policy.pdf
The three core commitments of Scale, Impact and Sustainability form the bed-rock of the Company''s philosophy on CSR initiatives. As per the CSR policy of the Company, Rural Transformation, Health, Education, Environment, Arts, Heritage & Culture and Disaster Response, are the focus areas for CSR engagement.
During the year under review, the Company spent '' 813 crore (around 2.21% of the average net profits of last three financial years) on CSR activities.
The Annual Report on CSR activities including summary of Impact Assessment Report is annexed herewith and marked as Annexure II to this Report.
be accessed at https://www.ril.com/
DownloadFiles/lRStatutory/Policy-on-
During the year under review, the Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions was amended to align it with the amendments in the Listing Regulations.
There were no materially significant related party transactions which could have potential conflict with the interests of the Company at large.
Members may refer to Note 34 of the Standalone Financial Statement which sets out related party disclosures pursuant to Ind AS.
Corporate Social Responsibility (CSR)
Over the past decade, the Company has focused on several corporate social responsibility programs. The CSR initiatives of the Company under the leadership of Smt. Nita M. Ambani, Founder and Chairperson, Reliance Foundation, have touched the lives of more than 5.75 crore people covering more than 50,600 villages and several urban locations across India.
The Company continues its endeavor to improve the lives of people and provide opportunities for their holistic development through its different initiatives in the areas of Rural Transformation, Health, Education, Sports for Development, Disaster Response, Arts, Culture, Heritage and Urban Renewal.
The Company adopted a multi-pronged approach to address the COVID-19 pandemic. The Company supported initiatives on healthcare, medical oxygen supply, emergency meal distribution, supply of free fuel, masks and awareness creation. Over 8.5 crore meals provided under Mission Anna Sewa; over 1.4 crore masks were distributed under Mission COVID-19 Suraksha and free fuel support was provided to over 70,000 emergency vehicles. Medical oxygen production was ramped up
The Company has a structured Group Risk Management Framework, designed to identify, assess and mitigate risks appropriately. The Risk Management Committee 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) ensuring that all material Strategic and Commercial including Cybersecurity, Safety and Operations, Compliance, Control and Financial risks have been identified and assessed and ensuring that all adequate risk mitigations are in place, to address these risks.
Further details on the Risk Management activities including the implementation of risk management policy, key risks identified and their mitigations are covered in Management Discussion and Analysis section, which forms part of the Annual Report.
Internal Financial Controls are an integral part of the Group Risk Management framework and processes that address financial as well as financial reporting risks. The key internal financial controls have been documented, automated wherever possible and embedded in the respective business processes.
Assurance to the Board on the effectiveness of internal financial controls is obtained through 3 Lines of Defence which include:
a) Management reviews and self-assessment;
b) Continuous controls monitoring by functional experts; and
c) Independent design and operational testing by the Group Internal Audit function.
The Company believes that these systems provide reasonable assurance that the Company''s internal financial controls are adequate and are operating effectively as intended.
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 Smt. Nita M. Ambani, Directors of the Company, retire by rotation at the ensuing Annual General Meeting. The Board of Directors, on the recommendation of the Human Resources, Nomination and Remuneration ("HRNR") Committee, has recommended their re-appointment.
Shri Yogendra P. Trivedi joined the Board of the Company in 1992 and the Board has benefitted from his sage counsel for nearly 30 years. He demitted office as a Director of the Company from the conclusion of the 44th Annual General Meeting held on June 24, 2021, due to health reasons.
He was the Chairman of three Board committees viz. Audit Committee, Corporate Social Responsibility and Governance Committee and Stakeholders'' Relationship Committee and was also a member of Human Resources, Nomination and Remuneration Committee. The Board places on record its deepest gratitude and appreciation towards valuable contribution made by Shri Yogendra P Trivedi to the growth and governance of the Company during his tenure as a Director of the Company.
The Board of Directors on the recommendation of the HRNR Committee has appointed His Excellency Yasir Othman H. Al Rumayyan as an Independent Director w.e.f. July 19, 2021 and the shareholders have approved the appointment for a period upto July 18, 2024. In the opinion of the Board, he possesses requisite expertise, integrity and experience (including proficiency).
Shri K. Sethuraman is associated with the Company since 1979 and was appointed as Group Company
Secretary and Chief Compliance Officer of the Company in 2011.
Shri K. Sethuraman has demitted his office as Group Company Secretary and Chief Compliance Officer of the Company with effect from close of business hours of October 22, 2021. He is presently designated as President - Group Corporate Secretarial and Governance. The Board places on record it''s appreciation to the contribution made by Shri K. Sethuraman for laying a strong foundation of compliance during his association of more than four decades. In his new role he will act as a mentor for developing next generation leaders and will oversee the group corporate secretarial and governance matters of the Company and it''s subsidiary companies.
Smt. Savithri Parekh was appointed as Joint Company Secretary and Compliance Officer on March 29,
2019 and on the recommendation of the HRNR Committee, the Board has designated her as the Company Secretary and Compliance Officer of the Company w.e.f. October 22, 2021.
Dr. Raghunath A. Mashelkar and Prof. Dipak C. Jain will be completing their second term of office, as Independent Directors of the Company, on July 20, 2022.
The Company has received declarations from all the Independent Directors of the Company confirming that:
a) they meet the criteria of independence prescribed under the Act and the Listing Regulations; and
b) they have registered their names in the Independent Directors'' Databank.
The Company has devised, inter alia, the following policies viz.:
a) Policy for selection of Directors and determining Directors'' independence; and
b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.
The aforesaid policies are available on the Company''s website and can
be accessed at https://www.ril.com/
DownloadFiles/IRStatutory/Policy-
for-Selection-of-Directors.pdf and
https://www.ril.com/DownloadFiles/
IRStatutory/Remuneration-Policy-
The Policy for selection of Directors and determining Directors'' independence sets out the guiding principles for the HRNR Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, while considering their appointment as Independent Directors of the Company. The Policy also provides for the factors in evaluating the suitability of individual board members with diverse background and experience that are relevant for the Company''s operations. There has been no change in the policy during the current year.
The Company''s remuneration policy is directed towards rewarding performance based on review of achievements. The remuneration policy is in consonance with existing industry practice. There has been no change in the policy during the current year.
The Company has a policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which includes criteria for performance evaluation of Non-Executive Directors and Executive Directors.
In accordance with the manner of evaluation specified by the HRNR Committee, the Board carried out annual performance evaluation of the Board, its Committees and Individual Directors. The Independent Directors carried out annual performance evaluation of the Chairman, the non-independent directors and the Board as a whole. The Chairman of the respective Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board based on the report of evaluation received from the respective Committees.
The Board has recommended the appointment of Deloitte Haskins &
Sells LLP, Chartered Accountants and Chaturvedi & Shah LLP, Chartered Accountants, as Auditors of the Company, for a period from the conclusion of forty-fifth Annual General Meeting till the conclusion of fiftieth Annual General Meeting of the Company.
Deloitte Haskins & Sells LLP and Chaturvedi & Shah LLP have confirmed their eligibility and qualification required under the Act for holding the office as Auditors of the Company.
Cost Auditors
The Board has appointed the following Cost Accountants as Cost Auditors for conducting the audit of cost records of products and services of the Company for various segments for the FY 2022-23 under Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014:
i. Textiles Business -Kiran J. Mehta & Co;
ii. Chemicals Business - Diwanji & Co., K.G. Goyal & Associates,
V.J. Talati & Co., Suresh D. Shenoy, Shome & Banerjee and Dilip
M. Malkar & Co.;
iii. Polyester Business - V.J. Talati & Co., Suresh D. Shenoy,
V. Kumar & Associates and K.G. Goyal & Associates;
iv. Electricity Generation - Diwanji & Co. and Kiran J. Mehta & Co.;
v. Petroleum Business -Suresh D. Shenoy;
vi. Oil & Gas Business - V.J. Talati & Co. and Shome & Banerjee; and
vii. Composite Solution -Kiran J. Mehta & Co.
Shome & Banerjee, Cost Accountants, have been nominated as the Company''s Lead Cost Auditors.
or actual violations of the Code of Conduct and reports them to the Audit Committee every quarter.
Employees and other stakeholders are required to report actual or suspected violations of applicable laws and regulations and the Code of Conduct. Such genuine concerns (termed Reportable Matter) disclosed as per Policy are called "Protected Disclosures" and can be raised by a Whistle-blower through an e-mail or dedicated telephone line or a letter to the ECTF or to the Chairman of the Audit Committee. The Vigil Mechanism and Whistle-blower policy is available on the Company''s website and can be accessed at https://www. ril.com/DownloadFiles/lRStatutory/ Vigil-Mechanism-and-Whistle-Blower-Policy.pdf
Prevention of Sexual Harassment at Workplace
In accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ("POSH Act") and Rules made thereunder, the Company has in place a policy which mandates no tolerance against any conduct amounting to sexual harassment of women at workplace. The Company has constituted Internal Committee(s) (ICs) to redress and resolve any complaints arising under the POSH Act. Training / awareness programs are conducted throughout the year to create sensitivity towards ensuring respectable workplace.
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 provided is proposed to be utilised by the recipient are provided in the Standalone Financial Statement (Please refer Note 2, 3, 7, 10, 34 and 40 to the Standalone Financial Statement).
A consolidated report was shared with the Chairman of the Board for his review and giving feedback to each Director.
Employeesâ Stock Option Schemes
The Employee Stock Option Scheme-2006 ("ESOS-2006") was withdrawn during FY 2017-18. However, options granted under ESOS-2006, but pending to be exercised, continued to be governed by ESOS-2006. As on March 31, 2022, there were no outstanding options under ESOS - 2006.
The HRNR Committee, through RIL ESOS 2017 Trust inter alia administers and monitors Reliance Industries Limited Employees'' Stock Option Scheme 2017 ("ESOS-2017").
The above Schemes are in line with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations,
2021 ("SBEB Regulations"). The details as required to be disclosed under the SBEB Regulations can be accessed at https://www.ril. com/DownloadFiles/lRStatutory/ ESOS-2006-Disclosure-2021-22. pdf and https://www.ril.com/ DownloadFiles/lRStatutory/ESOS-2017-Disclosure-2021-22.pdf
Auditors and Auditorsâ Report
Auditors
S R B C & CO LLP, Chartered Accountants and D T S & Associates LLP, Chartered Accountants will complete their present term on conclusion of the ensuing Annual General Meeting.
The Auditors'' Report does not contain any qualification, reservation, adverse remark or disclaimer. The Notes on financial statement referred to in the Auditors'' Report are selfexplanatory and do not call for any further comments.
In accordance with the provisions of Section 148(1) of the Act, read with the Companies (Cost Records and Audit) Rules, 2014, the Company has maintained cost records.
Secretarial Auditor
The Board had appointed Dr. K.R. Chandratre, Practising Company Secretary, to conduct Secretarial Audit. The Secretarial Audit Report for the financial year ended March 31, 2022 is annexed herewith and marked as Annexure III to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.
Disclosures
Meetings of the Board
Five Meetings of the Board of Directors were held during the year.
The particulars of the meetings held and attendance of each Director are detailed in the Corporate Governance Report.
Audit Committee
During the year under review,
Shri Yogendra P. Trivedi demitted office as a Director of the Company and consequently ceased to be the chairman and member of the Audit Committee. The Audit Committee presently comprises Shri Raminder Singh Gujral (Chairman), Dr. Raghunath A. Mashelkar, Shri Adil Zainulbhai and Shri K. V. Chowdary.
All the recommendations made by the Audit Committee were accepted by the Board.
Human Resources, Nomination and Remuneration (HRNR) Committee
During the year under review,
Shri Yogendra P. Trivedi demitted office as a Director of the Company and consequently ceased to be a
member of the HRNR Committee.
The HRNR Committee presently comprises Shri Adil Zainulbhai (Chairman), Dr. Raghunath A. Mashelkar, Shri Raminder Singh Gujral, Dr. Shumeet Banerji and Shri K. V. Chowdary.
Corporate Social Responsibility and Governance (CSR&G) Committee
During the year under review,
Shri Yogendra P. Trivedi demitted office as a Director of the Company and consequently ceased to be the chairman and member of the CSR&G Committee. The CSR&G Committee presently comprises Dr. Raghunath A. Mashelkar (Chairman), Shri Nikhil R. Meswani and Dr. Shumeet Banerji.
Stakeholdersâ Relationship (SR) Committee
During the year under review,
Shri Yogendra P. Trivedi demitted office as a Director of the Company and consequently ceased to be the chairman and member of the SR Committee. The SR Committee presently comprises Shri K. V. Chowdary (Chairman), Smt. Arundhati Bhattacharya, Shri Nikhil R. Meswani and Shri Hital R. Meswani.
Details of composition of other committees are given in the Corporate Governance Report.
Vigil Mechanism and Whistle-blower Policy
The Company has established a robust Vigil Mechanism and a Whistle-blower policy in accordance with the provisions of the Act and the Listing Regulations. Ethics & Compliance Task Force (ECTF) comprising an Executive Director, General Counsel, Group Controller and Group Corporate Secretarial and Governance has been established which oversees and monitors the implementation of ethical business practices in the Company. The task force evaluates incidents of suspected
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 IV to this Report.
Annual Return
The Annual Return of the Company as on March 31, 2022 is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/lRStatutory/Annual-Return-2021-22.pdf
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 of the top ten employees in terms of remuneration drawn and names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules 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 forms part of this Report.
Having regard to the provisions of the second 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. Any member interested in obtaining such information may address their email to [email protected]
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters 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 Options Schemes referred to
in this Report.
⢠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.
⢠There has been no change in the nature of business of the Company.
⢠There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.
⢠There was no instance of onetime settlement with any Bank or Financial Institution.
The Board of Directors wish to place on record its deep sense of appreciation for the committed services by all the employees of the Company. The
Board of Directors would also like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, government and regulatory authorities, stock exchanges, customers, vendors, members, debenture holders and debenture trustee during the year under review.
For and on behalf of the Board of Directors
Mukesh D. Ambani
Chairman and Managing Director May 06, 2022
Mar 31, 2021
Dear Members,
The Board of Directors present the Company''s Forty-fourth Annual Report (Post- IPO) and the Company''s audited financial statements for the financial year ended March 31, 2021.
Financial Results
The Company''s financial performance (standalone and consolidated) for the year ended March 31, 2021 is summarised below:
Consolidated |
||||||||
2020-21 |
2019-20 |
2020-21 |
2019-20 |
|||||
crore |
US$ million* |
crore |
US$ million* |
crore |
US$ million* |
crore |
US$ million* |
|
Profit Before Tax (Before Exceptional Item) |
22,908 |
3,133 |
44,561 |
5,889 |
49,819 |
6,814 |
58,050 |
7,672 |
Current Tax |
- |
- |
(7,200) |
(952) |
(2,205) |
(302) |
(8,630) |
(1,141) |
Deferred Tax |
4,732 |
647 |
(2,213) |
(292) |
483 |
66 |
(5,096) |
(673) |
Profit For The Year (Before Exceptional Item) |
27,640 |
3,780 |
35,148 |
4,645 |
48,097 |
6,578 |
44,324 |
5,858 |
Exceptional Item (net of tax) A |
4,304 |
589 |
(4,245) |
(561) |
5,642 |
772 |
(4,444) |
(587) |
Profit For The Year |
31,944 |
4,369 |
30,903 |
4,084 |
53,739 |
7,350 |
39,880 |
5,271 |
Net Profit attributable to Non-Controlling Interest |
- |
- |
- - |
(4,611) |
(631) |
(526) |
(70) |
|
Net Profit Attributable to Owners of the Company |
31,944 |
4,369 |
30,903 |
4,084 |
49,128 |
6,719 |
39,354 |
5,201 |
Balance in Retained Earnings |
14,146 |
3,141 |
26,808 |
4,815 |
32,972 |
4,766 |
12,330 |
2,038 |
Pursuant to Scheme of Arrangement # |
32,416 |
4,434 |
(33,481) |
(4,425) |
(728) |
(99) |
(8,496) |
(1,123) |
Fresh issue of equity by subsidiaries # |
- |
- |
- |
- |
1,18,170 |
16,163 |
- |
- |
Sub-Total |
78,506 |
11,944 |
24,230 |
4,474 |
1,99,542 |
27,549 |
43,188 |
6,116 |
Appropriations |
||||||||
Transferred to Statutory Reserve |
- |
- |
- |
- |
(128) |
(18) |
(77) |
(10) |
Transferred to Profit & Loss A/c a |
(33,217) |
(4,543) |
- |
- |
- |
- |
- |
- |
Transferred to Capital Redemption Reserve |
- |
- |
- |
- |
- |
- |
(40) |
(5) |
Transferred (to)/from Debenture Redemption Reserve |
- |
- |
- |
- |
41 |
6 |
(15) |
(2) |
Transferred (to)/from Special Economic Zone Reinvestment Reserve |
525 |
72 |
(5,500) |
(727) |
525 |
72 |
(5,500) |
(727) |
Dividend on Equity Shares |
(3,921) |
(536) |
(3,852) |
(509) |
(3,921) |
(536) |
(3,852) |
(509) |
Tax on dividend |
- |
- |
(732) |
(97) |
- |
- |
(732) |
(97) |
Closing Balance |
41,893 |
6,937 |
14,146 |
3,141 |
1,96,059 |
27,073 |
32,972 |
4,766 |
Figures in brackets represent deductions. * 1 US$ = ''73.110 Exchange Rate as on March 31, 2021 (1 US$ = ''75.665 as on March 31, 2020). A Refer Note 31 of the Standalone Financial Statement and Note 29 of the Consolidated Financial Statement. # Refer Note 14 of the Standalone and Consolidated Financial Statement. |
Results of Operations and the state of Company''s affairs
The Highlights of the Company''s performance (Standalone) for the year ended March 31, 2021 are as under:
⢠Value of Sales and services was ''2,78,940 crore (US$ 38.2 billion)
⢠Exports for the year was ''1,45,143 crore (US$ 19.9 billion)
⢠EBITDA for the year was ''48,318 crore (US$ 6.6 billion)
⢠Cash Profit for the year was ''36,411 crore (US$ 5.0 billion)
⢠Net Profit for the year was ''31,944 crore (US$ 4.4 billion)
Financial Performance (Consolidated)
⢠Value of Sales and services was ''5,39,238 crore (US$ 73.8 billion)
⢠EBITDA for the year was ''97,580 crore (US$ 13.3 billion)
⢠Cash Profit for the year was ''79,828 crore (US$ 10.9 billion)
⢠Net Profit for the year was ''53,739 crore (US$ 7.4 billion)
Dividend
The Board of Directors has recommended a dividend of ''7/-(Rupees Seven only) per equity share of ''10/- (Ten rupees) each fully paid-up of the Company (last year ''6.50 per equity share of ''10/- each). Pro-rata dividend shall be paid in proportion to the paid-up value of the partly paid equity shares. Dividend is subject to approval of members at the ensuing annual general meeting and shall be subject to deduction of income tax at source.
The dividend recommended is in accordance with the Company''s Dividend Distribution Policy. The Dividend Distribution Policy of the Company is annexed herewith and marked as Annexure I to this Report and the same is available on the Company''s website and can be accessed at
https://www.ril.com/DownloadFiles/
Details of material changes from the end of the financial year
The outbreak of corona virus (COVID-19) pandemic globally and in India is causing significant disturbance and slowdown of economic activity. Operations and revenue have been impacted due to COVID-19.
Material events during the year under review
Rights issue of Equity Shares
During the year under review, the Company had issued and allotted 42,26,26,894 partly paid-up equity shares of ''10/- each of the Company on rights basis, in the ratio of 1 equity share for every 15 equity shares held, to eligible equity shareholders of the Company at an issue price of ''1,257/-per fully paid-up equity share (including a premium of ''1,247/- per equity share). An amount equivalent to 25% of the issue price viz. ''314.25 per equity share was received on application.
In accordance with the terms of issue, the Board of Directors in its meeting held on March 26, 2021 made the following two calls on the aforesaid equity shares:
(a) First call of ''314.25 per partly paid equity share (comprising ''2.50 towards face value and ''311.75 towards securities premium), payable during the period from May 17, 2021 to May 31, 2021, both days inclusive; and
(b) Second & final call of ''628.50 per partly paid equity share (comprising ''5.00 towards face value and ''623.50 towards securities premium), payable during the period from November 15,
2021 to November 29, 2021, both days inclusive.
The funds raised by the Company through Rights Issue, have been utilised for the objects stated in the Letter of Offer, dated May 15, 2020, towards repayment of certain borrowings of the Company.
Issue of Debentures
The Company had issued and allotted on private placement basis, unsecured redeemable non-convertible debentures (NCDs) aggregating
Integrated Annual Report 2020-21 ''24,955 crore. Further, during the year, the Company received payment of 3rd tranche, aggregating ''500 crore, from the holders of partly paid listed unsecured redeemable non-convertible debentures (PPD Series-IA). The funds raised through NCDs have been utilised for repayment of existing borrowings and other purposes in the ordinary course of business.
Scheme of Amalgamation of Reliance Holding USA Inc., Reliance Energy Generation and Distribution Limited with the Company
A composite scheme of amalgamation and plan of merger amongst Reliance Holding USA Inc. ("RHUSA"), Reliance Energy Generation and Distribution Limited ("REGDL") and the Company (the "Scheme"), which provided for merger of RHUSA with REGDL and merger of REGDL with the Company, was approved by the Hon''ble National Company Law Tribunal, Mumbai Bench and the Scheme became effective from August 21, 2020. Both RHUSA and REGDL were wholly owned subsidiaries of the Company.
Scheme of Arrangement Between the Company and Reliance O2C Limited
The Board of Directors of the Company had approved a scheme of arrangement between (i) the Company, its shareholders and creditors, and (ii) Reliance O2C Limited and its shareholders and creditors (the "Scheme"). The Scheme, inter alia, provides for transfer of the oil-to-chemicals ("O2C") undertaking from the Company to Reliance O2C Limited, a wholly owned subsidiary, as a going concern on a slump sale basis on terms and conditions as detailed in the Scheme. The Scheme has been approved by the Shareholders and Creditors of the Company and is subject to approvals under the applicable laws including approval of the National Company Law Tribunal.
Transfer of Petroleum Retail Marketing Business
During the year under review, the Company transferred its Petroleum Retail Marketing business to Reliance BP Mobility Limited ("RBML"). RBML is
a fuels and mobility business with BP
Global Investments Limited ("bp"). bp holds 49% equity stake in RBML and the balance 51% is held by the Company.
Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review, as stipulated under 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.
Business Operations / Performance of the Company and its major Subsidiaries
Major developments and business performance of the Company and its major subsidiaries consolidated with the Company are given below:
Retail
Retail segment delivered a resilient performance against the backdrop of an unprecedented and challenging operating environment, arising from the COVID-19 pandemic situation that emerged at the start of the year. The business achieved revenue of ''1,53,818 crore and posted an all-time high EBITDA of ''9,842 crore for the year.
This was driven by gradual rebound of revenue streams, judicious cost management initiatives and boosted by higher investment income.
During the year, Reliance Retail executed India''s largest fund raise in the consumer / retail sector of ''47,265 crore for 10.09% stake from marquee global investors, reflecting the conviction in operating track record, model and prospects.
Digital Services
Digital Service Segment achieved revenue of ''90,287 crore, an increase of 29.7% y-o-y. Segment EBITDA was at ''34,035 crore for the year, a growth of 45.8% y-o-y. The Digital business added 37.9 million subscribers during the year, with year-end subscriber base at 426.2 million. Customer engagement on the Jio network remained healthy across data and voice services. Jio is one of the largest data networks globally carrying over 5 exabytes of data on a monthly basis. Average per capita monthly data usage across the subscriber base was 13.3 GB for the quarter ended March 2021.
During the year, Jio completed raising funds of ''152,056 crore across 13 marquee global investors. It also enhanced its spectrum portfolio by 56% to 1,732 MHz through acquisition of spectrum via the auction conducted by Department of Telecom in 2021 and spectrum trading agreement with Bharti Airtel.
In the endeavour to continue building the premiere digital society in India, multiple digital platforms like JioMart, JioMeet, JioHaptik, JioPOS-lite, JioGames, JioUPI, JioHealthHub, were launched which were key enablers of work from home, learn from home, health from home and shop from home during the Coronavirus crisis.
The business successfully dealt with the challenges posed by the COVID-19 pandemic and posted much improved profitability across all business lines in a difficult year. During financial year 2020-21, Network18 reported value of services of ''5,459 crore and EBITDA of ''796 crore (growth of 29% y-o-y). The improvement in profitability is a result of cost controls and concerted efforts to increase annuity-style revenue streams, including subscription and syndication.
The Oil to Chemicals (O2C) business experienced both price and margin dislocation due to the pandemic and lockdown in many countries during the first half of the financial year. Even in testing times such as this, the business delivered robust performance by leveraging the strong international and domestic supply-chain, multimodal logistics, deep integration and feedstock flexibility. Revenues for the O2C business declined 29% with lower volumes and lower realization due to decline in average crude and feedstock prices specifically during the first half of the year. Brent crude price for the year averaged at US$44.3/bbl versus US$61.1/bbl in the previous year. The segment performance was supported by sharp recovery in downstream demand and deltas in the second half of the year. During the financial year 2020-21, O2C business reported revenue of ''3,20,008 crore and EBITDA of ''38,170 crore.
Overall production meant for sale reduced from 71 MMT to 63.6 MMT. Most of the reduction came from transportation fuels due to global demand destruction. However, with agile business model and feedstock flexibility, the Company was able to maximize downstream throughput which stood at 71.9 MMT, a decrease of 10% y-o-y.
Segment Revenues for the year was lower by 33.4% y-o-y to ''2,140 crore primarily due to lower volumes from conventional fields and overall lower commodity price realization. EBITDA for the year declined by 27% to ''258 crore. For the year, domestic production (the Company''s share) was at 27.8 BCFe, down 28.4% y-o-y due to expiry of Panna Mukta Production Sharing Contract in December 2019 and cessation of production from D1D3 (KG D6) field in February 2020. US Shale (the Company''s share), production was 98.8 BCFe, up 22.9% on y-o-y basis. During the year, R-Cluster fields in KG D6 block commenced production and achieved peak production level of 12.8 MMSCMD in mid-April 2021, ahead of plan. In April 2021, Satellite fields also commenced production two months ahead of schedule despite COVID-19 challenges.
Credit Rating
The Company''s financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agencies. The details of credit ratings are disclosed in the Management Discussion and Analysis Report, which forms part of the Annual Report.
Consolidated Financial Statement
In accordance with the provisions of the Companies Act, 2013 ("the Act") and Listing Regulations read with Ind AS-110-Consolidated Financial Statement, Ind AS-28-Investments in Associates and Joint Ventures and Ind AS-31-Interests in Joint Ventures, the consolidated audited financial statement forms part of the Annual Report.
Subsidiaries, Joint Ventures and Associate Companies
During the year under review, companies listed in Annexure II to this Report have become and/or ceased to be the Company''s subsidiaries, joint ventures or associate companies.
A statement providing details of performance and salient features of the financial statements of Subsidiary / Associate / Joint Venture companies, as per Section 129(3) of the Act, is provided as Annexure A to the consolidated financial statement and therefore not repeated in this Report to avoid duplication.
The audited financial statement including the consolidated financial statement of the Company and all other documents required to be attached thereto is available on the Company''s website and can be accessed at https://www.ril.com/ar2020-21/pdf/RIL-Integrated-Annual-Report-2020-21.pdf The financial statements of the subsidiaries, as required, are available on the Company''s website and can be accessed at
https://www.ril.com/Financial-
The Company has formulated a Policy for determining Material Subsidiaries. The Policy is available on the Company''s website and can be accessed at https://www.ril.com/DownloadFiles/ IRStatutory/Material-Subsidiaries.pdf
During the year under review:
a) Reliance Retail Limited, Jio Platforms Limited, Reliance Jio Infocomm Limited and Reliance Global Energy Services (Singapore) Pte. Limited, were material subsidiaries of the Company, as per Listing Regulations.
b) The Company along with JM Financial Asset Reconstruction Company Limited (acting in its capacity
as a Trustee of ''JMFARC- March 2018 - Trust''- (JMFARC) acquired, in accordance with the approved Resolution plan, joint control over Alok Industries Limited. The Company holds 40.01% equity stake and JMFARC holds 34.99% equity stake in Alok Industries Limited aggregating to 75%.
Secretarial Standards
The Company has followed the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'' respectively.
Directors'' Responsibility Statement
The Directors state that:
a) in the preparation of the annual accounts for the year ended March 31, 2021, 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, 2021 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 adheres to the Corporate Governance requirements set out by the Securities and Exchange Board of India ("SEBI"). The Company has also implemented several best governance practices. The report on Corporate Governance as stipulated under the Listing Regulations forms part of the Annual Report. 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 (BRR) describing the initiatives taken by the Company from an environmental, social and governance perspective is available on the Company''s website and can be accessed at https://www.ril.com/ DownloadFiles/BRR202021.pdf
Contracts or arrangements with Related Parties
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in its 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 or which is required to be reported in Form No. AOC-2 in terms of Section 134(3) (h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Company''s website and can be accessed at https://www.ril.com/DownloadFiles/ IRStatutory/Policy-on-Materiality-of-RPT.pdf
There were no materially significant related party transactions which could have potential conflict with the interests of the Company at large.
Members may refer to Note 33 to the Standalone Financial Statement which sets out related party disclosures pursuant to Ind AS.
Corporate Social Responsibility (CSR)
Over the past decade, the Company has focused on several corporate social responsibility programs. The CSR initiatives of the Company under the leadership of Smt. Nita M. Ambani, Founder and Chairperson, Reliance Foundation, have touched the lives of more than 4.5 crore people covering more than 44,700 villages and several urban locations across India.
The Company continues its endeavour to improve the lives of people and provide opportunities for their holistic development through its different initiatives in the areas of Rural Transformation, Health, Education, Sports for Development, Disaster Response, Arts, Culture, Heritage and Urban Renewal.
The Company adopted a multi-pronged approach to address the COVID-19 pandemic. The Company supported initiatives on healthcare, medical oxygen supply, emergency meal distribution, supply of free fuel, masks and awareness creation. Over 5.5 crore meals provided under Mission Anna Sewa; over 81 lakh masks were distributed under Mission COVID-19 Suraksha and free fuel support was provided to 14,000 emergency vehicles. Medical oxygen production was ramped up from zero to 11% of India''s treatment needs for meeting the requirement of over one lakh patients every day. This was supplied free to several State Governments.
The Company supported national initiatives like Gram Uday Se Bharat Uday Abhiyan, Unnat Bharat Abhiyan, Swachh Bharat Abhiyan, Poshan Abhiyan, Jal Shakti Abhiyan, Sabki Yojana Sabka Vikas, Skill India Mission, Digital India and Doubling Farmers'' Income.
The CSR initiatives of the Company have won several awards including India Today-MDRA Special Healthgiri Award 2020, CII National Awards for Excellence in Water Management 2020 in the ''Beyond the Fence'' category and ICSI 5th CSR Excellence Award in Large Category. Town & Country, America''s leading general interest magazine, featured Smt. Nita M. Ambani and Reliance Foundation among the world''s top Philanthropists of 2020.
The CSR policy, formulated by the Corporate Social Responsibility and Governance ("CSR&G") Committee and approved by the Board, continues unchanged. The policy can be accessed at
https://www.ril.com/DownloadFiles/
The three core commitments of Scale, Impact and Sustainability form the bed-rock of the Company''s philosophy on CSR initiatives. As per the CSR policy of the Company, Rural Transformation, Health, Education, Environment,
Arts, Heritage & Culture and Disaster Response, are the focus areas for CSR engagement.
During the year, the Company spent ''922 crore (around 2.09% of the average net profits of last three financial years) on CSR activities.
The Annual Report on CSR activities is annexed herewith and marked as Annexure III to this Report.
The Company has a structured Group Risk Management Framework, designed to identify, assess and mitigate risks appropriately. The Risk Management Committee 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) ensuring that all material Strategic and Commercial including Cybersecurity, Safety and Operations, Compliance, Control and Financial risks have been identified and assessed and adequate risk mitigations are in place, to address these risks.
Further details on the Risk Management activities including the implementation of risk management policy, key risks identified, and their mitigations are covered in Management Discussion and Analysis section, which forms part of the Annual Report.
Internal Financial Controls are an integral part of the Group Risk Management framework and processes that address financial as well as financial reporting risks. The key internal financial controls have been documented, automated wherever possible and embedded in the respective business processes.
Assurance to the Board on the effectiveness of internal financial controls is obtained through 3 Lines of Defence which include:
a) Management reviews and self-assessment;
b) Continuous controls monitoring by functional experts; and
c) Independent design and operational testing by the Group Internal Audit function.
The Company believes that these systems provide reasonable assurance that the Company''s internal financial controls are adequate and are operating effectively as intended.
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 P. K. Kapil, Directors of the Company, retire by rotation at the ensuing annual general meeting. The Board of Directors, on the recommendation of the Human Resources, Nomination and Remuneration ("HRNR")
Committee, has recommended their re-appointment.
The Board of Directors, based on performance evaluation and as per the recommendation of the HRNR Committee has commended the reappointment of Dr. Shumeet Banerji, as an Independent Director of the Company for a second term of 5 (five) consecutive years, effective July 21, 2022 on completion of his current term of office.
In the opinion of the Board, he possesses requisite expertise, integrity and experience (including proficiency) for appointment as an Independent Director of the Company and the Board considers that, given his professional background, experience and contributions made by him during his tenure, the continued association of Dr. Shumeet Banerji would be beneficial to the Company.
The Company has received declarations from all the Independent Directors of the Company confirming that:
a) they meet the criteria of independence prescribed under the Act and the Listing Regulations; and
b) they have registered their names in the Independent Directors'' Databank.
The Company has devised, inter alia, the following policies viz.:
a) Policy for selection of Directors and determining Directors'' independence; and
b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.
The aforesaid policies are available on the Company''s website and can be accessed at
http://www.ril.com/DownloadFiles/ IRStatutorv/Policv-for-Selection-of-Directors.pdf and
https://www.ril.com/DownloadFiles/
IRStatutorv/Remuneration-Policv-
The Policy for selection of Directors and determining Directors'' independence sets out the guiding principles for the HRNR Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, while considering their appointment as Independent Directors of the Company. The Policy also provides for the factors in evaluating the suitability of individual Board members with diverse background and experience that are relevant for the Company''s operations. There has been no change in the policy during the current year.
The Company''s remuneration policy is directed towards rewarding performance based on review of achievements. The remuneration policy is in consonance with existing industry practice. There has been no change in the policy during the current year.
The Company has a policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which include criteria for performance evaluation of Non-Executive Directors and Executive Directors.
In accordance with the manner of evaluation specified by the HRNR Committee, the Board carried out annual performance evaluation of the Board, its Committees and Individual Directors. The Independent Directors carried out annual performance evaluation of the Chairperson, the non-independent directors and the Board as a whole. The Chairman of the respective Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board, based on the report of evaluation received from the respective Committees. A consolidated report was shared with the Chairman of the Board for his review and giving feedback to each Director.
Employees'' Stock Option Schemes
The Employee Stock Option Scheme -2006 ("ESOS-2006") was withdrawn during financial year 2017-18. However, options granted under ESOS-2006, but pending to be exercised, continue to be governed by ESOS-2006. The HRNR Committee, through RIL ESOS 2017 Trust inter alia administers and monitors Reliance Industries Limited Employees'' Stock Option Scheme 2017 ("ESOS-2017") of the Company.
The above Schemes are in line with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations"). The Company has obtained certificates from the Auditors of the Company stating that the Schemes have been implemented in accordance with the SBEB Regulations and the resolutions passed by the members. The certificates are available for inspection by members in electronic mode. The details as required to be disclosed under the SBEB Regulations can be accessed at https://www.ril.com/DownloadFiles/ IRStatutorv/ESOS-2006-Disclosure-2020-21.pdf and https://www.ril.com/DownloadFiles/ IRStatutorv/ESOS-2017-Disclosure-2020-21.pdf
Auditors and Auditors'' Report Auditors
S R B C & CO LLP, Chartered Accountants and D T S & Associates
LLP (formerly known as D T S & Associates), Chartered Accountants were appointed as Auditors of the Company for a term of 5 (five) consecutive years, at the annual general meeting held on July 21, 2017. The Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.
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.
The Board has appointed the following Cost Accountants as Cost Auditors for conducting the audit of cost records of products and services of the Company for various segments for the financial year 2021-22 under Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014:
i. Textiles Business - Kiran J. Mehta & Co;
ii. Chemicals Business - Diwanji & Co., K.G. Goyal & Associates, VJ. Talati & Co., Suresh D. Shenoy, Shome & Banerjee and Dilip M. Malkar & Co.;
iii. Polyester Business - VJ. Talati & Co., Suresh D. Shenoy, V.
Kumar & Associates and K.G.
Goyal & Associates;
iv. Electricity Generation - Diwanji & Co. and Kiran J. Mehta & Co.;
v. Petroleum Business -Suresh D. Shenoy;
vi. Oil & Gas Business - V.J. Talati & Co. and Shome & Banerjee;
vii. Gasification - Suresh D. Shenoy; and
viii. Composite Solution -Kiran J. Mehta & Co.
Shome & Banerjee, Cost Accountants, have been nominated as the Company''s Lead Cost Auditors.
In accordance with the provisions of Section 148(1) of the Act, read with the Companies (Cost Records and Audit) Rules, 2014, the Company has maintained cost records.
The Board had appointed Dr. K.R. Chandratre, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2020-21. The
Secretarial Audit Report for the financial year ended March 31, 2021 is annexed herewith and marked as Annexure IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.
DisclosuresMeetings of the Board
Eight Meetings of the Board of Directors were held during the year. The particulars of the meetings held and attended by each Director are detailed in the Corporate Governance Report.
The Audit Committee comprises Shri Yogendra P. Trivedi (Chairman),
Dr. Raghunath A. Mashelkar, Shri Adil Zainulbhai, Shri Raminder Singh Gujral and Shri K. V. Chowdary. During the year, all the recommendations made by the Audit Committee were accepted by the Board.
Corporate Social Responsibility and Governance Committee
The Corporate Social Responsibility and Governance Committee comprises Shri Yogendra P. Trivedi (Chairman), Shri Nikhil R. Meswani, Dr. Raghunath A. Mashelkar and Dr. Shumeet Banerji.
Human Resources, Nomination and Remuneration Committee
The Human Resources, Nomination and Remuneration Committee comprises Shri Adil Zainulbhai (Chairman), Shri Yogendra P. Trivedi, Dr. Raghunath A. Mashelkar, Shri Raminder Singh Gujral, Dr. Shumeet Banerji and Shri K. V. Chowdary.
Stakeholders'' Relationship Committee
The Stakeholders'' Relationship Committee comprises Shri Yogendra P. Trivedi (Chairman), Smt Arundhati Bhattacharya, Shri K. V. Chowdary,
Shri Nikhil R. Meswani and Shri Hital R. Meswani.
Details of composition of other committees are given in the Corporate Governance Section of the Annual Report.
The Company has established a robust Vigil Mechanism and a Whistleblower policy in accordance with the provisions of the Act and the Listing Regulations. An Ethics and Compliance Task Force (ECTF) comprising an Executive Director, General Counsel, Group Controller and Group Company Secretary has been established which oversees and monitors the implementation of ethical business practices in the Company. The task force reviews complaints and incidents on a quarterly basis and reports them to the Audit Committee.
Employees and other stakeholders are required to report actual or suspected violations of applicable laws and regulations and the Code of Conduct. Such genuine concerns (termed Reportable Matter) disclosed as per Policy are called "Protected Disclosures" and can be raised by a Whistle-blower through an e-mail or dedicated telephone line or a letter to the ECTF or to the Chairman of the Audit Committee. The Vigil Mechanism and Whistle-blower policy is available on the Company''s website and can be accessed at
https://www.ril.com/DownloadFiles/
IRStatutorv/Viail-Mechanism-and-
Prevention of Sexual Harassment at Workplace
In accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ("POSH Act") and Rules made thereunder, the Company has in place a policy which mandates no tolerance against any conduct amounting to sexual harassment of women at workplace. The Company has constituted Internal Committee(s) (ICs) to redress and resolve any complaints arising under the POSH Act. Training/awareness programs are conducted throughout the year to create sensitivity towards ensuring respectable workplace.
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 provided is proposed to be utilised by the recipient are provided in the Standalone Financial Statement (Refer Note 2, 3, 6, 9, 33 and 39 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.
Annual Return
The Annual Return of the Company as on March 31, 2021 is available on the Company''s website and can be accessed at
https://www.ril.com/DownloadFiles/
IRStatutorv/Annual-Return-2020-21.pdf
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 of the top ten employees in terms of remuneration drawn and names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules 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 forms part of this Report.
Having regard to the provisions of the second 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. Any member interested in obtaining such information may address their email to [email protected]
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters 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 Options Schemes referred to in this Report.
⢠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.
⢠There has been no change in the nature of business of the Company.
⢠There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.
⢠There was no instance of onetime settlement with any Bank or Financial Institution.
The Board of Directors wish to place on record its deep sense of appreciation for the committed services by all the employees of the Company. The Board of Directors would also like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, government and regulatory authorities, stock exchanges, customers, vendors, members, debenture holders and debenture trustee during the year under review.
For and on behalf of the Board of Directors
Mukesh D. Ambani
Chairman and Managing Director
April 30, 2021
Dividend Distribution Policy
The Board of Directors (the "Board") of Reliance Industries Limited (the "Company") at its meeting held on April 24, 2017 had adopted this Dividend Distribution Policy (the "Policy") as required by Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations").
Objective
The objective of this Policy is to establish the parameters to be considered by the Board of Directors of the Company before declaring or recommending dividend.
The Company has had an uninterrupted dividend payout since listing. In future, the Company would endeavour to pay sustainable dividend keeping in view the Company''s policy of meeting the long-term growth objectives from internal cash accruals.
Circumstances under which the shareholders may or may not expect dividend
The Board of Directors of the Company, while declaring or recommending dividend shall ensure compliance with statutory requirements under applicable laws including the provisions of the Companies Act, 2013 and Listing Regulations. The Board of Directors, while determining the dividend to be declared or recommended, shall take into consideration the advice of the executive management of the Company and the planned and further investments for growth apart from other parameters set out in this Policy.
The Board of Directors of the Company may not declare or recommend dividend for a particular period if it is of the view that it would be prudent to conserve capital for the then ongoing or planned business expansion or other factors which may be considered by the Board.
Parameters to be considered before recommending dividend
The Board of Directors of the Company shall consider the following financial / internal parameters while declaring or recommending dividend to shareholders:
⢠Profits earned during the financial year
⢠Retained Earnings
⢠Earnings outlook for next three to five years
⢠Expected future capital / liquidity requirements
⢠Any other relevant factors and material events.
The Board of Directors of the Company shall consider the following external parameters while declaring or recommending dividend to shareholders:
⢠Macro-economic environment - Significant changes in Macroeconomic environment materially affecting the businesses in which the Company is engaged in the geographies in which the Company operates
⢠Regulatory changes - Introduction of new regulatory requirements or material changes in existing taxation or regulatory requirements, which significantly affect the businesses in which the Company is engaged
⢠Technological changes which necessitate significant new investments in any of the businesses in which the Company is engaged.
Utilisation of Retained Earnings
The Company shall endeavour to utilise the retained earnings in a manner which shall be beneficial to the interests of the Company and also its shareholders.
The Company may utilise the retained earnings for making investments for future growth and expansion plans, for the purpose of generating higher returns for the shareholders or for any other specific purpose, as approved by the Board of Directors of the Company.
Parameters that shall be adopted with regard to various classes of shares
The Company has issued only one class of shares viz. equity shares. Parameters for dividend payments in respect of any other class of shares will be as per the respective terms of issue and in accordance with the applicable regulations and will be determined, if and when the Company decides to issue other classes of shares.
Conflict in Policy
In the event of any conflict between this Policy and the provisions contained in the Listing Regulations, the Regulations shall prevail.
Amendments
The Board may, from time to time, make amendments to this Policy to the extent required due to change in applicable laws and Listing Regulations or as deemed fit on a review.
For and on behalf of the Board of Directors
Mukesh D. Ambani
Chairman and Managing Director
April 30, 2021
Mar 31, 2019
Dear Members,
The Board of Directors are pleased to present the Companyâs Forty-second Annual Report (Post-IPO) and the Companyâs audited financial statements (standalone and consolidated) for the financial year ended March 31, 2019.
FINANCIAL RESULTS
The Companyâs financial performance for the year ended March 31, 2019 is summarised below:
STANDALONE |
CONSOLIDATED |
|||||||
2018-19 |
2017-18 |
2018-19 |
2017-18 |
|||||
Rs. |
US$ |
Rs. |
US$ |
Rs. |
US$ |
Rs. |
US$ |
|
crore |
million* |
crore |
million* |
crore |
million* |
crore |
million* |
|
PROFIT BEFORE TAX |
47,367 |
6,849 |
45,725 |
7,016 |
55,227 |
7,986 |
49,426# |
7,584 |
Less: Current Tax |
9,440 |
1,365 |
8,953 |
1,374 |
11,683 |
1,689 |
10,098 |
1,549 |
Deferred Tax |
2,764 |
399 |
3160 |
485 |
3,707 |
536 |
3,248 |
498 |
PROFIT FOR THE YEAR |
35,163 |
5,085 |
33,612 |
5,157 |
39,837 |
5,761 |
36,080 |
5,537 |
Add: Other Comprehensive Income |
59,674 |
8,629 |
(3,503) |
(537) |
58,765 |
8,498 |
(1,635) |
(251) |
Total Comprehensive Income for the year |
94,837 |
13,714 |
30,109 |
4,620 |
98,602 |
14,259 |
34,445 |
5,286 |
Less: Total Comprehensive Income attributable to |
- |
- |
- |
- |
241 |
35 |
9 |
1 |
Non-Controlling Interest |
||||||||
Total Comprehensive Income attributable to owners of |
94,837 |
13,714 |
30,109 |
4,620 |
98,361 |
14,224 |
34,436 |
5,285 |
the Company |
||||||||
Add: Balance in Profit and Loss Account (Adjusted) |
31,569 |
5,550 |
34,506 |
5,999 |
15,533 |
2,580 |
14,467 |
2,413 |
Add: Transferred from Capital Reserve Account |
- |
- |
- |
- |
- |
- |
- |
- |
Add: Transferred from Revaluation Reserve |
- |
- |
- |
- |
- |
- |
327 |
50 |
Add: Transferred from Share in Reserve of Associates |
- |
- |
- |
- |
- |
- |
10 |
2 |
Add: Transferred from Share Based Payments Reserve |
- |
- |
4 |
1 |
- |
- |
4 |
1 |
Less: On account ofAmalgamation/DivestmentofStake/Others |
- |
- |
- |
- |
(639) |
(92) |
(283) |
(43) |
Less: Securities Premium on Redemption of |
- |
- |
- |
- |
(15) |
(2) |
(144) |
(22) |
Non-Cumulative Optionally Convertible Preference Shares |
||||||||
Sub-Total |
1,26,406 |
19,264 |
64,619 |
10,620 |
1,13,240 |
16,710 |
48,817 |
7,686 |
LESS: APPROPRIATION |
||||||||
Transferred to Statutory Reserve |
- |
- |
- |
- |
15 |
2 |
221 |
34 |
Transferred to General Reserve |
30,000 |
4,338 |
25,000 |
3,836 |
30,000 |
4,338 |
25,000 |
3,836 |
Transferred to Capital Redemption Reserve |
- |
- |
- |
- |
- |
- |
2 |
- |
Transferred to Debenture Redemption Reserve |
4,124 |
596 |
4,134 |
634 |
4,147 |
600 |
4,145 |
636 |
Dividend on Equity Shares a |
3,554 |
514 |
3,255 |
499 |
3,554 |
514 |
3,255 |
499 |
Tax on dividend a |
728 |
105 |
661 |
101 |
728 |
105 |
661 |
101 |
Closing Balance (Including Other Comprehensive Income) |
88,000 |
13,711 |
31,569 |
5,550 |
74,796 |
11,151 |
15,533 |
2,580 |
- 1 US$ = Rs. 69.155 Exchange Rate as on March 31, 2019 (1 US$ = Rs. 65.175 as on March 31, 2018)
- Includes exceptional item of Rs. 1,087 crore A Pertaining to previous financial year
RESULTS OF OPERATIONS AND THE STATE OF COMPANYâS AFFAIRS
THE HIGHLIGHTS OF THE COMPANYâS PERFORMANCE (STANDALONE) FOR THE YEAR ENDED MARCH 31, 2019 ARE AS UNDER:
- Value of sales and services increased by 27.2% to Rs. 4,00,986 crore (US$ 58 billion).
- Exports increased by 27.4% to Rs. 2,24,391 crore (US$ 32.4 billion).
- PBDIT increased by 12.9% to Rs. 67,676 crore (US$ 9.8 billion).
- Profit Before Tax increased by 3.6% to Rs. 47,367 crore (US$ 6.8 billion).
- Cash Profit increased by 4.6% to Rs. 48,485 crore (US$ 7.0 billion).
- Net Profit increased by 4.6% to Rs. 35,163 crore (US$ 5.1 billion).
- Gross Refining Margin stood at US$ 9.2 / bbl for the year ended March 31, 2019.
FINANCIAL PERFORMANCE REVIEW AND ANALYSIS (CONSOLIDATED)
The Company achieved a consolidated revenue of Rs. 622,809 crore ($ 90.1 billion), an increase of 44.6% as compared to Rs. 430,731 crore in the previous year. Increase in revenue was primarily on account of higher product price realization led by 22% y-o-y increase in average Brent crude price, and increased petrochemical volumes. Robust growth in Retail and Digital Services business also contributed to higher revenues. Operating Profit before other income, depreciation and exceptional items increased by 30.8% on a y-o-y basis to Rs. 83,918 crore ($12.1 billion). Volume growth in Petrochemicals and rapidly increasing contribution from consumer businesses led to significant rise in operating profit for the year.
DIVIDEND
The Board of Directors has recommended a dividend of Rs. 6.50 per equity share of Rs. 10/each (@65%) for the financial year ended March 31, 2019 (last year Rs. 6/- per equity share). The payout is expected to be Rs. 4,641 crore (inclusive of dividend distribution tax of Rs. 789 crore). The dividend payment is subject to approval of members at the ensuing Annual General Meeting.
The dividend recommended is in accordance with the Companyâs Dividend Distribution Policy. The Dividend Distribution Policy of the Company is annexed herewith and marked as Annexure I to this Report and the same is put up on the Companyâs website and can be accessed at http://www.ril.com/ DownloadFiles/IRStatutory/Dividend-Distribution-Policy.pdf
MATERIAL CHANGES AFFECTING THE COMPANY
There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report. There has been no change in the nature of business of the Company.
MANAGEMENTâS DISCUSSION AND ANALYSIS REPORT
Managementâs Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), is presented in a separate section, forming part of the Annual Report.
DEVELOPMENTS IN BUSINESS OPERATIONS / PERFORMANCE
The developments in business operations / performance of the Company and its major subsidiaries consolidated with the Company are as below:
REFINING & MARKETING BUSINESS
In FY 2018-19, refining EBIT decreased by 19.8% y-o-y to Rs. 19,868 crore, impacted by volatile crude prices, multiyear low gasoline and naphtha cracks. Weakness in light distillate cracks was partly offset by firm middle distillate cracks. The Companyâs refining margins declined to $9.2/bbl, however, maintained a significant $4.3/bbl premium over the Singapore complex margins. With a countrywide operational network of 1,372 fuel retail outlets, the Company covers all major highways across the country. Supported by the network presence and the growing fleet customer count, Companyâs outlets registered an outstanding pump throughput of more than double the industry average during the year.
PETROCHEMICALS BUSINESS
In FY 2018-19, petrochemicals business delivered its best ever performance with the segment achieving its highest ever production level of 37.7 MMT, up 16% y-o-y. Petrochemicals segment EBIT increased by 51.9% to its highest level of Rs. 32,173 crore. EBIT margin increased to 18.7% from 16.9%, aided by strong integrated polyester chain margins. With the commencement of ethane cracking at Nagothane, all the key components of petrochemical investment cycle are now fully contributing to the earnings.
OIL AND GAS (EXPLORATION & PRODUCTION) BUSINESS
In FY 2018-19, revenues decreased by 3.8% to Rs. 5,005 crore. Volumes from domestic upstream fields and US shale were lower on account of natural decline and slowdown in development activity. Consequently, upstream operations registered EBIT of Rs.(1,379) crore. RIL is undertaking development of three deepwater fields, R-Cluster, Satellite- Cluster and D55 (MJ) fields. These fields are expected to come onstream from mid-2020 onwards. The new development expects to leverage RILâs partnership with BP, existing infrastructure in the Krishna-Godavari basin and current downturn in the capital equipment and services market. More than 200 wells are on production in Relianceâs domestic CBM block with production averaging 1 mmscmd this year.
RETAIL BUSINESS
Reliance Retail achieved a turnover of Rs. 1,30,566 crore in FY 2018-19, an increase of 88.7% y-o-y. The business delivered an EBIT of Rs. 5,546 crore for FY 2018-19, more than doubling over previous year. EBIT margin increased by 120 bps to 4.2% for the year. During the year, Reliance Retail added over 2,800 stores and now operates 10,415 retail stores in over 6,600 towns and cities covering an area of 22 million sq. ft. Reliance Retail operated 516 owned petro retail outlets as on March 31, 2019.
DIGITAL SERVICES
Digital service business achieved revenue of Rs. 46,506 crore, an increase of 94.5% y-o-y. Segment EBIT increased by 176.7% to Rs. 8,784 crore with EBIT margin of 18.9%. The company added 120.1 million subscribers during the year, with year-end subscribersâ base at 306.7 million. This was driven by strong adoption of Jio services across the country reflected by healthy customer engagement metrics on data and voice. The Board of Jio approved the demerger of its passive infrastructure, tower and fiber assets into two separate Special Purpose Vehicles (SPVs). The scheme of demerger was effective 31st March 2019 post all requisite internal, shareholder, debt holder and regulatory approvals. The assets would be held by a separate Securities and Exchange Board of India registered Infrastructure Investment Trusts (InvIT). This demerger deleverages the balance sheet and establishes Jio franchise as an asset-light, digital services company.
MEDIA AND ENTERTAINMENT
Relianceâs flagship media company Network18 Media & Investments Limited continued on its growth trajectory, and invested in key areas to fill whitespaces or fortify its competitive position. Focus during the year was on regional content, while ad-monetisation witnessed accelerated growth across broadcasting and digital platforms and genres-news, entertainment and film. Network18 reported revenues of Rs. 5,116 crore (growth of 178% y-o-y), and EBIT of â (52) crore on a consolidated basis.
ACQUISITION OF SHARES AND CONTROL OF DEN NETWORKS LIMITED (DEN) AND HATHWAY CABLE AND DATACOM LIMITED (HATHWAY)
During the year, Digital Media Distribution Trust (DMDT), of which Reliance Content Distribution Limited, a wholly-owned subsidiary of the Company is the sole beneficiary, through six Special Purpose Vehicles (SPVs), owned and controlled by DMDT, acquired shares of and sole control over Den Networks Limited and Hathway Cable and Datacom Limited and also acquired indirect control over GTPL Hathway Limited and Hathway Bhawani Cabletel and Datacom Limited.
CREDIT RATING
The Companyâs 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 Indiaâs sovereign rating |
International Debt |
Moodyâs |
Baa2 |
Stable |
At par with Indiaâs sovereign rating |
Long-Term Debt |
CRISIL |
CRISIL AAA |
Stable |
Highest rating awarded by CRISIL |
Long-Term Debt |
India Ratings |
IND AAA |
Stable |
Highest rating awarded by India Ratings |
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the provisions of the Companies Act, 2013 (âthe Actâ) and Ind AS 110 - Consolidated Financial Statements read with Ind AS 28 Investments in Associates and Joint Venture and Ind AS 31 - 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 II to this Report have become or ceased to be Companyâs subsidiaries, joint ventures or associate companies.
A statement providing details of performance and salient features of the financial statement of Subsidiary/ Associate/ Joint Venture companies, as per Section 129(3) of the Act, 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 is put up on the Companyâs website and can be accessed at http://www.ril.com/InvestorRelations/ FinancialReporting.aspx. The financial statements of the subsidiaries, as required, are put up on the Companyâs website and can be accessed at http://www.ril. com/InvestorRelations/Downloads.aspx
These documents will also be available for inspection on all working days, during business hours, at the Registered Office of the Company.
The Company has formulated a Policy for determining Material Subsidiaries. The Policy is put up on the Companyâs website and can be accessed at https://www.ril. com/DownloadFiles/IRStatutory/Material-Subsidiaries.pdf
SECRETARIAL STANDARDS
The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to âMeetings of the Board of Directorsâ and âGeneral Meetingsâ, respectively, have been duly followed by the Company.
DIRECTORSâ RESPONSIBILITY STATEMENT
Your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31, 2019, 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, 2019 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 (âSEBIâ). The Company has also implemented several best governance practices. The report on Corporate Governance as stipulated under the Listing Regulations forms part of the Annual 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 a part of the Annual Report.
CONTRACTS ORARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in its ordinary course of business and on an armâs 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 is put up on the Companyâs website and can be accessed at http://www.ril. com/DownloadFiles/IRStatutory/Policy-on-Materiality-of-RPT.pdf
There were no materially significant related party transactions which could have potential conflict with interest of the Company at large.
Members may refer Note 31 to the Standalone Financial Statement which sets out related party disclosures pursuant to Ind AS.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the year under review, the Company has won the Golden Peacock Global Award 2018 for the success of its Corporate Social Responsibility initiatives. This is the third time the Company won the award highlighting its commendable work under CSR ambit. The award is to recognise the transformative work done by Reliance Foundation (RF), the CSR arm of the Company. The Award instituted by the Institute of Directors (IOD), India in 1991, is regarded as a benchmark of Corporate Excellence worldwide. Under the able leadership of its Founder and Chairperson, Smt. Nita M. Ambani, RF has touched the lives of around 26 million people across India covering more than 18,000 villages and 200 urban locations.
The Corporate Social Responsibility and Governance (âCSR&Gâ) Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (âCSR Policyâ) indicating the activities to be undertaken by the Company, which has been approved by the Board. There has not been any change in the policy during the current year.
The CSR Policy is put up on the Companyâs website and can be accessed at http:// www.ril.com/DownloadFiles/IRStatutory/ CSR-Policy.pdf
The key philosophy of 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 including sustainable development of water and land resources, diversification of livelihoods and access to knowledge resources through digital platforms.
- Health: Promoting healthcare across all levels, including preventive health care and sanitation through improved access, awareness and health seeking behaviour.
- Education: Setting up of an Institution of Eminence for higher education in the country, access to quality education, training and skill enhancement including employability enhancing vocational skills among youth.
- Sports for Development: Long-term commitment towards development of grassroots sports in the country through training, mentoring and other development programmes for the youth.
- Disaster Response: Managing and responding to disaster situations through appropriate relief measures.
- Arts, Culture and Heritage: Protection and promotion of Indiaâs art, culture and heritage.
- Environment: Environmental sustainability, ecological balance, conservation of natural resources and promoting biodiversity.
The Company also undertakes other need-based initiatives in compliance with Schedule VII to the Act.
During the year, the Company spent Rs. 849 crore (around 2.09 % of the average net profits of last three financial years) on CSR activities.
The annual report on CSR activities is annexed herewith and marked as Annexure III to this Report.
RISK MANAGEMENT
The 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 Companyâs enterprise wide risk management framework; and
(b) overseeing that all the risks that the organisation faces such as Strategic and Commercial, Safety and Operations, Compliance and Control and Financial risks have been identified and assessed and there is an adequate risk management infrastructure in place, capable of addressing those risks.
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 Managementâs Discussion and Analysis section, which forms part of the Annual Report.
INTERNAL FINANCIAL CONTROLS
Internal Financial Controls are an integrated part of the risk management process, addressing financial and financial reporting risks. The internal financial controls have been documented, digitised and embedded in the business processes.
Assurance on the effectiveness of internal financial controls is obtained through management reviews, control selfassessment, continuous monitoring by functional experts as well as testing of the internal financial control systems by the internal auditors and statutory auditors during the course of their audits. The Company believes that these systems provide reasonable assurance that Companyâs internal financial controls are designed effectively and are operating as intended.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Act and the Articles of Association of the Company, Shri P.K. Kapil and Smt. Nita M. Ambani, Directors of the Company, retire by rotation at the ensuing Annual General Meeting. The Board of Directors on the recommendation of the Human Resources, Nomination and Remuneration (âHRNRâ) Committee has recommended their re-appointment.
Prof. Ashok Misra demitted office as an Independent Director of the Company w.e.f. October 17, 2018. The Board places on record its appreciation towards valuable contribution made by Prof. Ashok Misra during his tenure as a Director of the Company.
The term of office of Shri R.S. Gujral as an Independent Director, will expire on June 11, 2020. The Board of Directors, based on the performance evaluation and as per the recommendation of the HRNR Committee has recommended re-appointment of Shri R.S. Gujral, as an Independent Director of the Company for a second term of 5 (five) consecutive years on the expiry of his current term of office. The Board considers that, given his background, experience and contributions made by him during his tenure, the continued association of Shri R.S. Gujral would be beneficial to the Company.
The Board of Directors, on recommendation of the HRNR Committee, has:
(a) Appointed Smt. Arundhati Bhattacharya as an Additional Director, to be an Independent Director, effective October 17, 2018;
(b) Re-appointed Shri P.M.S. Prasad as Executive Director for a period of five years effective August 21, 2019; and
(c) Appointed Smt. Savithri Parekh as Joint Company Secretary and Compliance Officer effective March 29, 2019.
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 the following Policies viz:
a) Policy for selection of Directors and determining Directorsâ independence; and
b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.
The aforesaid policies are put up on the Companyâs website and can be accessed at http://www.ril.com/DownloadFiles/ IRStatutory/Policy-for-Selection-of-Directors.pdf and http://www.ril.com/ DownloadFiles/IRStatutory/Remuneration-Policy-for-Directors.pdf
The Policy for selection of Directors and determining Directorsâ independence sets out the guiding principles for the HRNR Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, in case of their appointment as Independent Directors of the Company.
The Policy also provides for the factors in evaluating the suitability of individual Board members with diverse background and experience that are relevant for the Companyâs operations.
There has been no major change in the aforesaid policy during the year. The criteria of independence, number of directorships and committee memberships prescribed in the policy has been changed to align the policy with the amendment made in this regard in the Act and the Listing Regulations.
The Remuneration Policy for Directors, Key Managerial Personnel and other employees sets out the guiding principles for the HRNR Committee for recommending to the Board the remuneration of the Directors, Key Managerial Personnel and other employees of the Company. There has been no change in the policy during the current year.
PERFORMANCE EVALUATION
The Company has a policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which include criteria for performance evaluation of Nonexecutive Directors and Executive Directors.
In accordance with the manner specified by the HRNR Committee, the Board carried out annual performance evaluation of the Board, its Committees and Individual Directors. The Independent Directors carried out annual performance evaluation of the Chairperson. The Chairman of the respective 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 Committees. A consolidated report was shared with the Chairman of the Board for his review and giving feedback to each Director.
EMPLOYEESâ STOCK OPTION SCHEMES
The HRNR Committee inter alia administers and monitors Employeesâ Stock Option Schemes of the Company. No grants have so far been made under Employee Stock Option Scheme - 2017. Employee Stock Option Scheme - 2006 (âESOS - 2006â) has been withdrawn during the financial year 2017-18. However options granted under ESOS - 2006, which are in force continue to be governed by ESOS - 2006.
The Schemes are in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 (âSBEB Regulationsâ). The Company has received a certificate from the Auditors of the Company that the schemes are implemented in accordance with the SBEB Regulations and the resolutions passed by the members. The certificate would be available at the Annual General Meeting for inspection by members. The details as required to be disclosed under the SBEB Regulations are put up on the Companyâs website and can be accessed at http://www.ril.com/DownloadFiles/ IRStatutory/SEBI-Regulations-2006.pdf and http://www.ril.com/DownloadFiles/ IRStatutory/SEBI-Regulations-2017.pdf
AUDITORS AND AUDITORSâ REPORT
(I) STATUTORY AUDITORS
S R B C & CO LLP, Chartered Accountants and D T S & Associates, Chartered Accountants were appointed as Auditors of the Company for a term of 5 (five) consecutive years, at the Annual General Meeting held on July 21, 2017. The Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.
The Notes on financial statement referred to in the Auditorsâ Report are self-explanatory and do not call for any further comments. The Auditorsâ Report does not contain any qualification, reservation, adverse remark or disclaimer.
(II) COST AUDITORS
The Board has appointed following Cost Accountants as Cost Auditors for conducting the audit of cost records of products and services of the Company for various segments for the financial year 2019-20 under section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014:
(i) Textiles Business - Kiran J. Mehta & Co;
(ii) Chemicals Business - Diwanji & Co., K.G. Goyal & Associates, V.J. Talati & Co., Suresh D. Shenoy, Shome & Banerjee and Dilip M. Malkar & Co.;
(iii) Polyester Business - VJ. Talati & Co., Suresh
D. Shenoy and V. Kumar & Associates;
(iv) Electricity Generation - Diwanji & Co. and Kiran J. Mehta & Co.;
(v) Petroleum Business - Suresh D. Shenoy;
(vi) Oil & Gas Business - V.J. Talati & Co. and Shome & Banerjee;
(vii) Gasification-Suresh D. Shenoy; and
(viii) Composite Solution - Diwanji & Co.
Shome & Banerjee, Cost Accountants, were nominated as the Companyâs Lead Cost Auditors.
(III) SECRETARIAL AUDITOR
The Board had appointed Dr. K.R. Chandratre, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2018-19. The Secretarial Audit Report for the financial year ended March 31, 2019 is annexed herewith and marked as Annexure IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
DISCLOSURES
(I) MEETINGS OF THE BOARD
Seven Meetings of the Board of Directors were held during the year. The particulars of meetings held and attended by each Director are detailed in the Corporate Governance Report.
(II) 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.
(III) CORPORATE SOCIAL RESPONSIBILITY AND GOVERNANCE COMMITTEE
The Corporate Social Responsibility and Governance (âCSR&Gâ) Committee comprises Shri Yogendra P. Trivedi (Chairman), Shri Nikhil R. Meswani, Dr. Raghunath A. Mashelkar and Dr. Shumeet Banerji.
(IV) HUMAN RESOURCES, NOMINATION AND REMUNERATION COMMITTEE
The Human Resources, Nomination and Remuneration Committee comprises Shri Adil Zainulbhai (Chairman), Shri Yogendra P. Trivedi, Dr. Raghunath A. Mashelkar, Shri Raminder Singh Gujaral and Dr. Shumeet Banerji
(V) VIGIL MECHANISM
The Company has established a robust Vigil Mechanism and a Whistle-blower policy in accordance with provisions of the Act and Listing Regulations. The Vigil Mechanism is supervised by an âEthics & Compliance Task Forceâ comprising a member of the Board as the Chairperson and senior executives as members.
Protected disclosures can be made by a whistle-blower through an e-mail, or dedicated telephone line or a letter to the Ethics & Compliance Task Force or to the Chairman of the Audit Committee.
The Vigil Mechanism and Whistle-blower policy is put up on the Companyâs website and can be accessed at: http://www.ril. com/DownloadFiles/IRStatutory/Vigil-Mechanism-and-Whistle-Blower-Policy.pdf
(VI) PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (âPOSH Actâ) and Rules made thereunder, the Company has formed Internal Complaints Committee for various work places to address complaints pertaining to sexual harassment in accordance with the POSH Act. The Company has a policy for prevention of Sexual Harassment, which ensures a free and fair enquiry process with clear timelines for resolution. To build awareness in this area, the Company has been conducting online programme on a continuous basis.
(VII) 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 recipient are provided in the Standalone Financial Statement (Please refer Note 2, 3, 6, 9, 31 and 37 to the Standalone Financial Statement).
(VIII) DEBENTURES
The Company has issued on private placement basis and allotted, Unsecured, Redeemable Non-convertible Debentures (NCDs) aggregating Rs.19,000 crore (paid up to the extent of Rs. 17,000 crore) during the financial year 2018-19. The funds raised through issuance of NCDs have been utilised for refinancing of existing borrowings and other purpose in the ordinary course of business.
(IX) 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.
(X) ANNUAL RETURN
As required under Section 134(3)(a)of the Act, the Annual Return is put up on the Companyâs website and can be accessed at http://www.ril.com/DownloadFiles/ IRStatutory/Annual Return 2018-19.pdf and http://www.ril.com/DownloadFiles/ IRStatutory/Annual Return 2017-18.pdf
(XI) 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 of top ten employees in terms of remuneration drawn and names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules 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 forms part of this Report.
Having regard to the provisions of the second 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 on all working days, during business hours, at the Registered Office of the Company.
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 matters 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 Employeesâ Stock Options Schemes 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 Companyâs operations in future.
- No fraud has been reported by the Auditors to the Audit Committee or the Board.
- There is no Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.
ACKNOWLEDGEMENT
The Board of Directors wish to place on record its deep sense of appreciation for the committed services by all the employees of the Company. The Board of Directors would also 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.
For and on behalf of the Board of Directors
Mukesh D. Ambani
Chairman and Managing Director
Mumbai, April 18, 2019
Mar 31, 2018
Board's Report
Dear Members,
The Board of Directors are pleased to present the Companyâs Forty-first Annual Report (Post-IPO) and the Companyâs audited financial statements (standalone and consolidated) for the financial year ended March 31, 2018.
Financial Results
The Companyâs financial performance for the year ended March 31, 2018 is summarized below:
 |
STANDALONE |
CONSOLIDATED |
||||||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|||||
 |
Rs, crore |
US$ Rs, crore million* |
US$ Rs, crore US$ Rs, crore million* million* |
US$ million* |
||||
Profit Before Tax |
45,725 |
7,016 |
40,777 |
6,288 |
49,426 |
7,584 |
40,034 |
6,173 |
Less: Current Tax |
8,953 |
1,374 |
8,333 |
1,285 |
10,098 |
1,549 |
8,880 |
1,369 |
Deferred Tax |
3,160 |
485 |
1,019 |
157 |
3,248 |
498 |
1,321 |
204 |
Profit for the year |
33,612 |
5,157 |
31,425 |
4,846 |
36,080 |
5,537 |
29,833 |
4,600 |
Add: Other Comprehensive Income |
(3,503) |
(537) |
2,192 |
338 |
(1,635) |
(251) |
1,827 |
282 |
Total Comprehensive Income for the year |
30,109 |
4,620 |
33,617 |
5,184 |
34,445 |
5,286 |
31,660 |
4,882 |
Less: Total Comprehensive Income attributable to Non Controlling Interest |
 |  |
- |
- |
9 |
1 |
(64) |
(10) |
Total Comprehensive Income attributable to owners of the Company |
30,109 |
4,620 |
33,617 |
5,184 |
34,436 |
5,285 |
31,724 |
4,892 |
Add: Balance in Profit and Loss Account (Adjusted) |
34,506 |
5,999 |
25,679 |
4,638 |
14,467 |
2,413 |
7,851 |
1,393 |
Add: Transferred from Capital Reserve Account |
 |  |
- |
- |
 |  |
- |
- |
Add: Transferred from Revaluation Reserve |
 |  |  |  |
327 |
50 |
 |  |
Add: Transferred from Share in Reserve of Associates |
 |  |  |  |
10 |
2 |
 |  |
Add: Transferred from Share Based Payments Reserve |
4 |
1 |
 |  |
4 |
1 |
 |  |
Less: On account of Amalgamation / Divestment of Stake |
 |  |
- |
- |
(283) |
(43) |
(252) |
(39) |
Less: Securities Premium on Redemption of Non-Cumulative Optionally Convertible Preference Shares |
 |  |  |  |
(144) |
(22) |
 |  |
Sub-Total |
64,619 |
10,620 |
59,296 9,822 |
48,817 |
7,686 |
39,323 |
6,246 |
|
Less: Appropriation |
 |  |  |  |  |  |  |  |
Transferred to Statutory Reserve |
 |  |
- |
- |
221 |
34 |
66 |
10 |
Transferred to General Reserve |
25,000 |
3,836 |
24,790 |
3,823 |
25,000 |
3,836 |
24,790 |
3,823 |
Transferred to Capital Redemption Reserve |
 |  |
- |
- |
2 |
0 |
- |
- |
Transferred to Debenture Redemption Reserve |
4,134 |
634 |
- |
- |
4,145 |
636 |
- |
- |
Dividend on Equity Shares |
3,255 |
499 |
- |
- |
3,255 |
499 |
- |
- |
Tax on Dividend |
661 |
101 |
- |
- |
661 |
101 |
- |
- |
Closing Balance (including Other Comprehensive Income) |
31,569 |
5,550 |
34,506 |
5,999 |
15,533 |
2,580 |
14,467 |
2,413 |
Results of Operations and the State of Company's Affairs
The Highlights of the Companyâs performance (Standalone) for the year ended March 31, 2018 are as under:
- Â Â Â Value of sales and services increased by 19.0 % to Rs, 3,15,357 crore (US$ 48.4 billion).
- Â Â Â Exports increased by 19.2Â %Â to Rs, 1,76,117 crore (US$ 27.0 billion).
- Â Â Â PBDIT increased by 15.4 % to Rs, 59,961 crore (US$ 9.2 billion).
- Â Â Â Profit Before Tax increased by 12.1 % to Rs, 45,725 crore (US$ 7.0 billion).
- Â Â Â Cash Profit increased by 13.3 % to Rs, 46,352 crore (US$ 7.1 billion).
- Â Â Â Net Profit increased by 7.0 % to Rs, 33,612 crore (US$ 5.2 billion).
- Â Â Â Gross Refining Margin stood at US$ 11.6 / bbl for the year ended March 31, 2018.
Financial Performance Review and Analysis (Consolidated) The Company achieved a consolidated turnover of Rs, 4,30,731 crore (US$ 66.1 billion) for the year ended March 31, 2018, an increase of 30.5 %, as compared to Rs, 3,30,180 crore in the previous year. Increase in revenue is primarily on account of higher volumes with start-up of petrochemicals projects and uptrend in prices of products in refining and petrochemical businesses. Turnover was also boosted by robust growth in retail business which recorded a 104.9 % surge in turnover to Rs, 69,198 crore. Brent crude oil price averaged US$ 57.5 /bbl in FY2017-18 as compared to US$ 48.6/bbl in the previous year. Exports (including deemed export) from India were marginally higher at Rs, 1,76,117 crore (US$ 27.0 billion) as against Rs, 1,47,755 crore in the previous year.
Dividend
The Board of Directors has recommended a dividend of Rs, 6/- per equity share of Rs, 10/- each on the increased paid-up share capital post issue of bonus shares during the financial year 2017-18 in the ratio of 1:1 (last year Rs, 11/- per equity share) for the financial year ended March 31, 2018 amounting to Rs, 4,281 crore (inclusive of dividend distribution tax of Rs, 728 crore). The dividend payment is subject to approval of members at the ensuing Annual General Meeting.
The dividend payout is in accordance with the Companyâs Dividend Distribution Policy. The Dividend Distribution Policy of the Company is annexed herewith marked as Annexure I to this Report.
Bonus Shares
During the year under review, the Company has issued and allotted 308,03,34,238 bonus shares to the equity shareholders in the ratio of 1:1 (i.e. one fully paid equity share of ' 10/- each for one fully paid equity share).
Material changes affecting the Company There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report. There has been no change in the nature of business of the Company.
Management's Discussion and Analysis Report
Managementâs Discussion and Analysis Report for the year under review, as stipulated under 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 the Company and its major subsidiaries consolidated with the Company are as below:
Refining &Â Marketing Business
FY 2017-18 refining EBIT increased by 3.2% y-o-y to a record of ' 25,869 crore, supported by strong product demand, lower freight rates, effective crude sourcing and robust risk management. With a countrywide operational network of 1,313 fuel outlets, the Company covers the key highways in the country. Customer count enrolled in Relianceâs industry leading fleet program, Trans-Connect, grew by 31% during FY 2017-18. Supported by the network presence and the growing fleet customer count, Companyâs outlets registered an outstanding Pump throughput of double the industry average during the year.
Petrochemicals Business
FY 2017-18 revenue growth was primarily due to higher volumes from new Paraxylene, ROGC and its downstream units (PE and MEG), with the segment achieving its highest ever production level of 30.8 MMT, up 24% y-o-y. Petrochemicals segment EBIT increased sharply by 63.0% to its highest ever level of Rs, 21,179 crore ($ 3.2 billion). Earnings were supported by favorable product deltas across integrated polyester chain, PP, PVC along with the growth in volumes. EBIT margin was higher by nearly 300bps to 16.9%, reflecting Companyâs strengthened cost positions across product chains and unmatched feedstock flexibility.
Oil and Gas (Exploration &Â Production) Business FY 2017-18, revenues increased by 0.3% to '5,204 crore. This marginal change was on account of better price realizations and ramp up of production in CBM which were partly offset by decline in production in KG D6 and Shale Gas. Consequently, upstream operations registered negative EBIT of '(1,536) crore.
During the year Reliance divested its holdings in the Marcellus shale JV which was operated by Carrizo Oil &Â Gas. Reliance continues to focus on value maximization in the remaining two JVs with focus on improvement in well design and execution efficiency.
The Company commenced commercial production from its Coal Bed Methane (CBM) block SP (West)-CBM-2001/1 in March 2017. More than 200 wells were put on production with production ramp up crossing the 1 MMSCMD level during the year.
Retail Business
Reliance Retail achieved a turnover of Rs,69,198 crore in FY 2017-18, more than doubling from the turnover of Rs,33,765 crore achieved last year. The business delivered an EBIT of Rs,2,064 crore for FY 2017-18, more than doubling from Rs,784
Credit Rating
The Companyâs 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 Indiaâs sovereign rating |
International Debt |
Moodyâs |
Baa2 |
Stable |
At par with Indiaâs sovereign rating |
Long Term Debt |
CRISIL |
CRISIL AAA |
Stable |
Highest rating awarded by CRISIL |
Long Term Debt |
India Ratings |
IND AAA |
Stable |
Highest rating awarded by India Ratings |
Â
crore achieved last year. During the year, Reliance Retail added 221 stores and 3,736 Jio Points.
Reliance Retail operated 7,573 retail stores in over 4,400 cities covering an area of 17.7 million sq. ft. as on March 31, 2018. Reliance Retail operated 495 petro retail outlets as on March 31, 2018.
Digital Services
Despite competitive pressures Digital Services business recorded revenues of Rs,23,916 crore, with year-end subscribersâ base at 186.6 million and Segment EBIT was at Rs,3,174 crore for the year, with EBIT margin of 13.3%. This is strong financial performance within very first year of commercial operations demonstrating strong fundamental and operating leverage of the business.
Media and Entertainment
Network18 subsidiary viz. TV18 took operational control of and raised its stake to 51% in entertainment JV viz. Viacom18. TV18 can drive value-addition and synergies across the multi-platform group, comprising broadcast, digital, filmed and experiential entertainment and media businesses.
Network18 reported revenues of Rs,1,839 crore (+23% y-o-y, despite tepid industry environment), and EBIT of Rs,(25) crore on a consolidated basis.
The sharp revenue escalation is led by the impact of subsidiary TV18 acquiring control of entertainment JV Viacom18, partly offset by HomeShop18 ceasing to be a subsidiary due to its share-swap acquisition of ShopCJ during the last quarter of the fiscal.
Consolidated Financial Statement
In accordance with the provisions of the Companies Act, 2013 ("the Act") and Ind AS 110 - Consolidated Financial Statement read with Ind AS - 28 Investments in Associates and Ind AS 31 - 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 II to this Report have become or ceased to be Companyâs subsidiaries, joint ventures or associate companies.
A statement containing the salient features of the financial statement of subsidiary / associate / joint venture companies, as per Section 129(3) of the Act, 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 is put on the Companyâs website and may be accessed at: http://www.ril.com/ InvestorRelations/FinancialReporting.aspx The financial statements of each of the subsidiaries is put on the Companyâs website and may be accessed at: http://www.ril.com/InvestorRelations/Downloads.aspx. These documents will also be available for inspection on all working days, during business hours, at the Registered Office of the Company.
The Company has formulated a Policy for determining Material Subsidiaries. The Policy may be accessed at:Â http://www.ril.com/DownloadFiles/IRStatutory/Material-Subsidiaries.pdf
Secretarial Standards
The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to 'Meetings of the Board of Directorsâ and 'General Meetingsâ, respectively, have been duly followed by the Company.
Directors' Responsibility Statement
Your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31, 2018, 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) Â Â Â 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, 2018 and of the profit of the Company for the year ended on that date;
c) Â Â Â 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) Â Â Â the Directors have prepared the annual accounts on a going concern basis;
e) Â Â Â 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) Â Â Â 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 governance practices.
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 a part of the Annual Report.
Contracts or Arrangements with Related Parties
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in its ordinary course of business and on an armsâ 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 Companyâs website at:Â http://www.ril.com/DownloadFiles/IRStatutory/Policy-on-Materiality-of-RPT.pdf
There were no materially significant related party transactions which could have potential conflict with interest of the Company at large.
Members may refer to Note 31 to the standalone financial statement which sets out related party disclosures pursuant to Ind AS.
Corporate Social Responsibility (CSR)
During the year under review, the Company has won the Golden Peacock Award 2017 for the success of its Corporate Social Responsibility initiatives and in particular for the transformative work done by Reliance Foundation (RF), the CSR arm of the Company. Under the able leadership of its Founder and Chairperson, Smt. Nita M. Ambani, RF has touched the lives of 20 million people across India covering more than 13,500 villages and 100 urban locations. The Company was recognized by the Awards Jury under the Chairmanship of Justice (Dr.) Arijit Pasayat, former Judge, Supreme Court of India. Golden Peacock Award, is instituted by the Institute of Directors (IOD), India in 1991, and are regarded as a benchmark of Corporate Excellence worldwide.
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 Companyâs website at:Â http://www.ril.com/DownloadFiles/IRStatutory/CSR-Policy.pdf
The key philosophy of 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:
- Â Â Â Rural Transformation: Creating sustainable livelihood solutions, addressing poverty, hunger and malnutrition.
- Â Â Â Environment: Environmental sustainability, ecological balance, conservation of natural resources and promoting bio-diversity.
- Â Â Â Health: Affordable solutions for healthcare through improved access, awareness and health seeking behaviour.
- Â Â Â Education and Sports: Access to quality education, training and skill enhancement, building sports &Â skills in young students.
- Â Â Â Disaster Response: Managing and responding to disaster.
- Â Â Â Arts, Culture and Heritage: Protection and promotion of Indiaâs art, culture and heritage.
The Company also undertakes other need based initiatives in compliance with Schedule VII to the Act.
During the year, the Company spent Rs, 745 crore (around 2.12% 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 III to this Report.
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 Companyâs enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as Strategic and Commercial, Safety and Operations, Compliance and Control and Financial risks have been identified and assessed and there is an adequate risk management infrastructure in place, capable of addressing those risks.
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 Managementâs Discussion and Analysis section, which forms part of this Report.
Internal Financial Controls
Internal Financial Controls are an integrated part of the risk management process, addressing financial and financial reporting risks. The internal financial controls have been documented, digitized and embedded in the business processes.
Assurance on the effectiveness of internal financial controls is obtained through management reviews, control self assessment, continuous monitoring by functional experts as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.
Directors and Key Managerial Personnel
In accordance with the provisions of the Act and the Articles of Association of the Company, Shri P.M.S. Prasad and Shri Nikhil. R. Meswani, Directors of the Company, retire by rotation at the ensuing Annual General Meeting. The Board of Directors on the recommendation of the Human Resources, Nomination and Remuneration Committee has recommended their re-appointment.
Dr. D. V. Kapur has ceased to be a Director of the Company w.e.f. July 21, 2017. The Board places on record its appreciation towards valuable contribution made by Dr. D. V. Kapur during his tenure as a Director of the Company
The Board of Directors on recommendation of the Human Resources, Nomination and Remuneration Committee has re-appointed Shri Mukesh D. Ambani as Managing Director of the Company for a period of 5 (five) years with effect from April 19, 2019, subject to approval of shareholders, as his current term of office is upto April 18, 2019.
The term of office of Shri Adil Zainulbhai, as an Independent Director, will expire on March 31, 2019. The Board of Directors, on recommendation of the Human Resources, Nomination and Remuneration Committee has recommended re-appointment of Shri Adil Zainulbhai, as an Independent Director of the Company for a second term of 5 (five) consecutive years on the expiry of his current term of office.
The shareholders of the Company at its Annual General Meeting held on July 21, 2017 have approved re-appointment of Shri Yogendra P. Trivedi, Prof. Ashok Misra, Shri Mansingh L. Bhakta, Prof. Dipak C. Jain and Dr. Raghunath A. Mashelkar as Independent Directors of the Company, for a second term of 5 (five) consecutive years on the Board of the Company by passing special resolution and appointed Dr. Shumeet Banerji as an Independent Director of the Company, for a term of 5 (five) consecutive years.
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 following policies of the Company are attached herewith marked as Annexure IV A and Annexure IV B:
a) Â Â Â Policy for selection of Directors and determining Directorsâ independence; and
b) Â Â Â Remuneration Policy for Directors, Key Managerial Personnel and other employees.
Performance Evaluation
The Company has devised a Policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which include criteria for performance evaluation of Non-executive Directors and Executive Directors. The evaluation process inter aliaconsiders attendance of Directors at Board and committee meetings, acquaintance with business, communicating inter se board members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy.
The Board carried out an annual performance evaluation of the Board, Committees, Individual Directors and the Chairperson. The Chairman of the respective 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 Committees.
The report on performance evaluation of the Individual Directors was reviewed by the Chairman of the Board and feedback was given to Directors.
Employees' Stock Option Schemes
The Companyâs Employees Stock Option Scheme viz. ESOS-2006 has been in place since year 2006-07 and the Company has made grants under ESOS-2006 to the eligible employees of the Company and its subsidiaries. The Human Resources, Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employeesâ Stock Option Plan of the Company. The Company, during the year obtained approval of the members for a new scheme viz. ESOS-2017 and pursuant to the said approval it was decided to withdraw ESOS-2006 and cancel balance of options not granted. Accordingly, ESOS-2006 stands cancelled. However, existing options granted and which are in force will continue to be governed by ESOS-2006. The Company did not make any grant under ESOS-2017 during the FY 2017-18. Other than the above, there has not been any material change in the Employee Stock Option Schemes during the current financial year.
The Schemes are 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 Schemes are implemented in accordance with the SBEB Regulations and the resolutions passed by the members. The certificate would be available at the Annual General Meeting for inspection by members. The details as required to be disclosed under the SBEB Regulations and certificate from Auditors are put on the Companyâs website and may be accessed at: http://www.ril.com/DownloadFiles/IRStatutory/ESQS-2006-Disclosure.pdf and http://www.ril. com/DownloadFiles/IRStatutory/ESQS-2017-Disclosure.pdf
Auditors and Auditors' Report
Statutory Auditors
M/s. S R B C &Â Co. LLP, Chartered Accountants and M/s. D T S &Â Associates, Chartered Accountants were appointed as Auditors of the Company, for a term of 5 (five) consecutive years, at the Annual General Meeting held on July 21, 2017. They have confirmed that they are not disqualified from continuing as Auditors of the Company.
The Notes on financial statement referred to in the Auditorsâ Report are self-explanatory and do not call for any further comments. The Auditorsâ Report does not contain any qualification, reservation, adverse remark or disclaimer.
Cost Auditors
The Board has appointed following cost auditors for conducting the audit of cost records of products and services of the Company for various segments for the FY 2018-19:
(i) Â Â Â For Textiles Business - Kiran J. Mehta &Â Co., Cost Accountants;
(ii) Â Â Â For Chemicals Business - Diwanji &Â Co., Cost Accountants, K.G. Goyal &Â Associates, Cost Accountants, V.J. Talati &Â Co., Cost Accountants,
Suresh D. Shenoy, Cost Accountant, Shome &Â Banerjee, Cost Accountants and Dilip M. Malkar &Â Co., Cost Accountants;
(iii) Â Â Â For Polyester Business - V.J. Talati &Â Co., Cost Accountants, Shri Suresh D. Shenoy, Cost Accountant, and V. Kumar &Â Associates, Cost Accountants;
(iv) Â Â Â For Electricity Generation - Diwanji &Â Co., Cost Accountants and Kiran J. Mehta &Â Co., Cost Accountants ;
(v) Â Â Â For Petroleum Business - Shri Suresh D. Shenoy, Cost Accountant;
(vi) For Oil &Â Gas Business - V.J. Talati &Â Co., Cost
Accountants and Shome &Â Banerjee, Cost Accountants.
Shome &Â Banerjee, Cost Accountants, were nominated as the Companyâs Lead Cost Auditors.
Secretarial Auditor
The Board had appointed Dr. K.R. Chandratre, Practising Company Secretary, to conduct Secretarial Audit for the FY 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith marked as Annexure V 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 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)
During the year, the Corporate Social Responsibility and Governance Committee (CSR&G) was re-constituted by appointing Dr. Shumeet Banerji as a member of the Committee. The CSR&G Committee comprises Shri Yogendra P. Trivedi (Chairman), Shri Nikhil R. Meswani, Dr. Raghunath A. Mashelkar and Dr. Shumeet Banerji.
Vigil Mechanism
RIL has established a robust Vigil Mechanism and a Whistle-blower policy in accordance with provisions of the Act and Listing Regulations. The Vigil Mechanism is supervised by an 'Ethics &Â Compliance Task Forceâ comprising a member of the Board as the Chairperson and senior executives as members.
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 is put on the Companyâs website and can be accessed at :Â http://www.ril.com/DownloadFiles/IRStatutory/Vigil-Mechanism-and-Whistle-Blower-Policy.pdf
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 recipient are provided in the standalone financial statement (Please refer to Note 3, 9, 2, 6, 31 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 marked 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, as amended, 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 on all working days, during business hours, at the Registered Office of the Company. 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 matters as there were no transactions on these items during the year under review:
- Â Â Â Details relating to deposits covered under Chapter V of the Act.
- Â Â Â Issue of equity shares with differential rights as to dividend, voting or otherwise.
- Â Â Â Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employeesâ Stock Options Plan referred to in this Report.
- Â Â Â 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.
- Â Â Â Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
- Â Â Â No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future.
- Â Â Â No fraud has been reported by the Auditors to the Audit Committee or the Board.
Acknowledgement
The Board of 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. The Board of Directors also wish to place on record its deep sense of appreciation for the committed services by the Companyâs executives, staff and workers.
                                                                  For and on behalf of the Board of Directors
                                                                 Mukesh D. Ambani
                                                                 Chairman and Managing Director
Mumbai, April 27, 2018
Â
Mar 31, 2017
Dear Members,
The Board of Directors are pleased to present the Company''s Fortieth Annual Report (Post-IPO) and the Company''s audited financial statements (standalone and consolidated) for the financial year ended March 31, 2017.
FINANCIAL RESULTS
The Company''s financial performance for the year ended March 31, 2017 is summarized below:
STANDALONE |
CONSOLIDATED |
|||||||
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|||||
Rs, crore |
US$ million1 |
Rs, crore |
US$ million* |
Rs, crore |
US$ million* |
Rs, crore |
US$ million* |
|
PROFIT BEFORE TAX |
40,777 |
6,288 |
36,016 |
5,436 |
40,034 |
6,173 |
38,737 |
5,847 |
Less: Current Tax |
8,333 |
1,285 |
7,801 |
1,177 |
8,880 |
1,369 |
8,042 |
1,214 |
Deferred Tax |
1,019 |
157 |
831 |
125 |
1,321 |
204 |
834 |
126 |
PROFIT FOR THE YEAR |
31,425 |
4,846 |
27,384 |
4,134 |
29,833 |
4,600 |
29,861 |
4,507 |
Add: Other Comprehensive Income |
2,192 |
338 |
838 |
126 |
1,827 |
282 |
946 |
143 |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
33,617 |
5,184 |
28,222 |
4,260 |
31,660 |
4,882 |
30,807 |
4,650 |
Less: Total Comprehensive Income attributable to Non Controlling Interest |
- |
- |
- |
- |
(64) |
(10) |
111 |
17 |
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY |
33,617 |
5,184 |
28,222 |
4,260 |
31,724 |
4,892 |
30,696 |
4,633 |
Add: Balance in Profit and Loss Account (Adjusted) |
25,679 |
4,638 |
26,716 |
4,794 |
7,851 |
1,393 |
7,268 |
1,304 |
Add: Transferred from Capital Reserve Account |
- |
- |
- |
- |
- |
- |
839 |
127 |
Add: On account of Amalgamation / Disposal of Subsidiaries |
- |
- |
- |
- |
(252) |
(39) |
(65) |
(10) |
Add: Movement in Other Comprehensive Income |
- |
- |
(1,589) |
(240) |
||||
SUB-TOTAL |
59,296 |
9,822 |
54,938 |
9,054 |
39,323 |
6,246 |
37,149 |
5,814 |
LESS: APPROPRIATION |
||||||||
Transferred to Statutory Reserve |
- |
- |
- |
- |
66 |
10 |
35 |
5 |
Transferred to General Reserve |
24,790 |
3,823 |
22,000 |
3,321 |
24,790 |
3,823 |
22,000 |
3,321 |
Transferred to Capital Redemption Reserve |
- |
- |
- |
- |
- |
- |
1 |
0 |
Transferred to Debenture Redemption Reserve |
- |
- |
- |
- |
- |
- |
3 |
0 |
Dividend on Equity Shares |
- |
- |
6,039 |
911 |
- |
- |
6,039 |
911 |
Tax on dividend |
- |
- |
1,220 |
184 |
- |
- |
1,220 |
184 |
CLOSING BALANCE (INCLUDING OTHER COMPREHENSIVE INCOME) |
34,506 |
5,999 |
25,679 |
4,638 |
14,467 |
2,413 |
7,851 |
1,393 |
INDIAN ACCOUNTING STANDARD
The Ministry of Corporate Affairs (MCA) on February 16,
2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from April 1, 2016 with a transition date of April 1, 2015. Ind AS has replaced the previous Indian GAAP prescribed under Section 133 of the Companies Act, 2013 ("the Act") read with Rule 7 of the Companies (Accounts) Rules, 2014.
Ind AS is applicable to the Company from April 1, 2016.
The reconciliations and descriptions of the effect of the transition from previous GAAP to Ind AS have been set out in Note 41 in the notes to accounts in the standalone financial statement and in Note 42 in the notes to accounts in the consolidated financial statement.
RESULTS OF OPERATIONS AND THE STATE OF COMPANY''S AFFAIRS
THE HIGHLIGHTS OF THE COMPANY''S PERFORMANCE (STANDALONE) FOR THE YEAR ENDED MARCH 31, 2017 ARE AS UNDER:
Revenue from operations increased by 5.5 % to Rs, 2,65,041 crore (US$ 40.9 billion).
Exports increased 0.6% to Rs, 1,47,755 crore (US$ 22.8 billion).
PBDIT increased by 10.2% to Rs, 51,965 crore (US$ 8.0 billion).
Profit before Tax increased by 13.2 % to Rs, 40,777 crore (US$ 6.3 billion).
Cash Profit increased by 11.2% to Rs, 40,909 crore (US$ 6.3 billion).
Net Profit increased by 14.8 % to Rs, 31,425 crore (US$ 4.8 billion).
Gross Refining Margin stood at US$ 11.0 / bbl for the year ended March 31, 2017.
FINANCIAL PERFORMANCE REVIEW AND ANALYSIS (CONSOLIDATED)
The Company achieved a consolidated turnover of Rs, 3,30,180 crore (US$ 50.9 billion) for the year ended March 31, 2017, an increase of 12.6%, as compared to Rs, 2,93,298 crore in the previous year. Increase in revenue is primarily on account of increase in prices of refining and petrochemical products partially offset by lower volumes from E&P business. Turnover was also boosted by robust growth in retail business which recorded a 60.2% surge in turnover to Rs, 33,765 crore.
Brent crude oil price averaged US$ 48.6/bbl in FY2016-17 as compared to US$ 47.5/bbl in the previous year. Exports (including deemed export) from India were marginally higher at Rs, 1,47,755 crore (US$ 22.8 billion) as against Rs, 1,46,855 crore in the previous year.
During FY 2016-17, the Company took significant steps towards completion of the ongoing hydrocarbon projects with the commissioning of Para-xylene (PX) plant at Jamnagar, making it the 2nd largest producer of PX globally. During the year, the Company completed the world''s largest and most complex ethane project. It commissioned ethane receipt and handling facilities at its Dahej manufacturing facilities in a record time of less than three years. The Refinery Off-Gas Cracker (ROGC) and downstream projects as well as gasification linked to DTA refinery achieved the installation and mechanical completion during the year and pre-commissioning and start up activities are in full swing. The installation and mechanical completion for the gasification linked to the Company''s SEZ refinery has also been substantially achieved. The completion of the hydrocarbon capex cycle will significantly enhance the Company''s cash flows and impart a high degree of stability to its earnings stream.
DIVIDEND
The Board of Directors has recommended a dividend of Rs, 11/-(that is, 110%) per equity share of ''10/- each (last year Rs, 10.50 per equity share) for the financial year ended March 31, 2017 amounting to Rs, 3,916 crore (inclusive of dividend distribution tax of Rs, 661 crore). The dividend payment is subject to approval of members at the ensuing Annual General Meeting.
The dividend payout is in accordance with the Company''s Dividend Distribution Policy.
The Dividend Distribution Policy of the Company is annexed herewith as Annexure I to this Report.
MATERIAL CHANGES AFFECTING THE COMPANY
There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this Report. There has been no change in the nature of business of the Company.
MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT
Management''s Discussion and Analysis Report for the year under review, as stipulated under 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:
REFINING & MARKETING BUSINESS
The revenue from the R&M segment increased y-o-y to Rs, 2,50,833 crore (US$38.7 billion), reflecting higher average oil prices and volumes during the year. Refining EBIT increased by 6.5% y-o-y to a record level of Rs, 25,056 crore (US$ 3.9 billion), supported by strong product demand, lower freight rates and effective crude sourcing and robust risk management.
At US$11.0/bbl, refining margins were at an 8 (eight) year high. Premium over Singapore GRM was also at an 8 (eight) year high of US$5.2/bbl.
PETROCHEMICALS BUSINESS
The revenue from the Petrochemicals segment increased by 12.2% y-o-y to Rs, 92,472 crore (US$ 14.3 billion), primarily due to increase in prices across polymers and polyester chain. Petrochemicals segment EBIT increased sharply by 27.5% to Rs, 12,990 crore (US$ 2.0 billion), supported by favourable product deltas and marginal volume growth. Petrochemical EBIT margins were at 5 (five) years high at the level of 14%.
OIL AND GAS (EXPLORATION & PRODUCTION) BUSINESS
During the year, the Company commenced commercial production from its Coal Bed Methane block (CBM), at Sohagpur (West). The CBM project is India''s largest surface hydrocarbon project. The revenues for the domestic oil and gas operations declined by 34.6% to Rs. 2,787 crore. This was largely on account of 23% decline in production and reduced gas price realization. Consequently domestic upstream operations registered negative EBIT of Rs. (131) crore. In the US Shale operations, weaker Natural Gas differentials in the Marcellus region along with lower volumes resulted in lower revenues and EBITDA.
The business is taking a cautious approach to resuming development and focusing on conserving cash and retaining optionality.
RETAIL BUSINESS
Reliance Retail achieved a turnover of Rs, 33,765 crore in FY 2016- 17 as against Rs, 21,075 crore during the previous year, registering a strong growth of 60.2%. The business delivered record profits during the year with an EBIT of Rs, 784 crore as against Rs, 504 crore in the previous year.
Reliance Retail added 371 stores during the year. It operated 3,616 stores across 702 cities with an area of over 13.5 million square feet. In addition to the retail stores, Reliance Retail operated 448 fuel outlets as on March 31, 2017.
DIGITAL SERVICES
Reliance Jio announced the commencement of services with ''Jio Welcome Offer'' in September 2016. In a short period of 170 days, Jio crossed a milestone of 100 million customers on its all IP wireless broadband network, reflecting an unprecedented level of acceptance for any technology company globally.
In February 2017, Jio announced industry redefining tariff plans as it embarked upon the world''s largest migration from free to paid services. It announced the Jio Prime Membership for its initial customers and within a month of announcing the Jio Prime offer, over 72 million Jio customers signed up for Jio Prime, making it one of the most successful customer privilege programmes anywhere in the world.
Within 6 months of the launch of Jio, India became the highest mobile data user globally with a monthly consumption of over
1 billion GB. This level of growth has been unprecedented on any mobile network anywhere in the world, and is a testimony to the comprehensive digital ecosystem that Jio has created.
Jio continues to expand its current LTE network coverage foot print and is also deploying Fiber-to-the-home (FTTH) technology for wire-line broadband and Carrier-Wi-Fi technologies for broadband via public hotspots.
MEDIA AND ENTERTAINMENT
Network18 improved its market-standing and continued investing for growth in what was a tumultuous year for the media industry. The operating revenues on a consolidated basis stood at Rs, 1,491 crore, down by 2.4% from Rs, 1,527 crore in FY 2015-16.
Driven by sustained investments into new businesses and entry into more regional markets, Network18 reported an consolidated EBIT of Rs, (201) crore for FY 2016-17, as against Rs, 173 crore in FY 2015-16.
CONSOLIDATED FINANCIAL STATEMENT
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 Ratings |
IND AAA |
Stable |
Highest rating awarded by India Rating |
In accordance with the Act and Ind AS 110 - Consolidated Financial Statements read with Ind AS 28 - Investments in Associates and Ind AS 31 - 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 II 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/ Investor Relations/FinancialReporting.aspx. The financial statements of each of the subsidiaries may also be accessed on the Company''s website at the link: http://www.ril.com/ Investor Relations/Downloads.aspx. These documents will also be available for inspection on all working days, that is, 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, 2017, 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, 2017 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.
The 16th ICSI National Awards for Excellence in Corporate Governance, were presented to the best Governed Companies by The Institute of Company Secretaries of India (ICSI) and the
Company was presented the prestigious ICSI Certificate of Recognition for Excellence in Corporate Governance for the year 2015-16.
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 the Annual Report.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on arms'' 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 30 to the standalone financial statement which sets out related party disclosures pursuant to Ind AS.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board is pleased to inform that the Company was presented the first ICSI CSR Excellence Award in the large category in the ICSI CSR Excellence Awards function organised by The Institute of Company Secretaries of India (ICSI).
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: Affordable 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.
Arts, Heritage and Culture: Protection and promotion of India''s arts, culture and heritage.
Urban Renewal
The Company also undertakes other need based initiatives in compliance with Schedule VII to the Act.
During the year, the Company spent Rs, 659.20 crore (around 2.13% 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 III.
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 organization 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.
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
Internal Financial Controls are an integrated part of the risk management process, addressing financial and financial reporting risks. The internal financial controls have been documented, digitized and embedded in the business processes.
Assurance on the effectiveness of internal financial controls is obtained through management reviews, control self assessment, continuous monitoring by functional experts as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Act and the Articles of Association of the Company, Smt. Nita M. Ambani and Shri Hital R. Meswani, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment.
The term of Shri P. K. Kapil and Shri Nikhil R. Meswani as Whole-time Director is up to May 15, 2018 and June 30, 2018, respectively. The Board of Directors on the recommendation of the Human Resources, Nomination and Remuneration Committee has re-appointed Shri P. K. Kapil and Shri Nikhil R. Meswani as Whole-time Directors of the Company for a period of 5 (five) years with effect from May 16, 2018 and July 01, 2018 respectively, subject to approval of shareholders.
The first term of office of Shri Yogendra P. Trivedi, Prof. Ashok Misra, Shri Mansingh L. Bhakta, Dr. D. V. Kapur, Prof. Dipak C.
Jain and Dr. Raghunath A. Mashelkar, as Independent Directors, expires at the ensuing Annual General Meeting.
Dr. D. V. Kapur has requested the Board not to consider him for re-appointment and relieve him from the office of the director after the expiry of his present term.
The Board has recommended re-appointment of
Shri Yogendra P. Trivedi, Prof. Ashok Misra, Shri Mansingh L.
Bhakta, Prof. Dipak C. Jain and Dr. Raghunath A. Mashelkar, as
Independent Directors of the Company for a second term of 5 (five) consecutive years.
The Board places on record its appreciation towards valuable contribution made by Dr. D. V. Kapur during his tenure as a Director of the Company.
Based on the recommendation of the Human Resources, Nomination and Remuneration Committee, the Board has recommended that Dr. Shumeet Banerji be appointed as an Independent Director by the members for a term of 5 (five) consecutive years.
The Company has received declarations from all the Independent Directors of the Company and Dr. Shumeet Banerji confirming that they meet the criteria of independence prescribed under the Act and the Listing Regulations.
The following policies of the Company are attached herewith marked as Annexure IV A and Annexure IV B:
a) Policy for selection of Directors and determining Directors independence; and
b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.
PERFORMANCE EVALUATION
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, acquaintance with business, communicating inter se board members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy, benchmarks established by global peers, etc, which is in compliance with applicable laws, regulations and guidelines.
The Board carried out annual performance evaluation of the Board, Board Committees and Individual Directors and Chairperson. 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 reports on performance evaluation of the Individual Directors were reviewed by the Chairman of the Board.
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.
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. The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI (Share Based Employee Benefits) Regulations,
2014 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 SEBI (Share Based Employee Benefits) Regulations, 2014 are put on the Company''s website at the link: http://www.ril.com/ Investor Relations/Downloads.aspx
AUDITORS AND AUDITORS'' REPORT
STATUTORY AUDITORS
As per the provisions of the Act, the period of office of Chaturvedi & Shah, Chartered Accountants, Deloitte Haskins & Sells LLP, Chartered Accountants and Rajendra & Co., Chartered Accountants, Statutory Auditors of the Company, expires at the conclusion of the ensuing Annual General Meeting.
It is proposed to appoint S R B C & CO LLP, Chartered Accountants and D T S & Associates, Chartered Accountants, as Joint Auditors of the Company, for a term of 5 (five) consecutive years. S R B C & CO LLP, Chartered Accountants and D T S & Associates, Chartered Accountants, have confirmed their eligibility and qualification required under the Act for holding the office, as Statutory Auditors of the Company.
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.
COST AUDITORS
The Board appointed the following Cost Auditors for conducting the audit of cost records of the Company for various segments for the FY 2016-17:
(i) For Textiles Business - Kiran J. Mehta & Co., Cost Accountants;
(ii) For Chemicals Business - Diwanji & Associates, Cost Accountants, K.G. Goyal & Associates, Cost Accountants,
V.J. Talati & Co., Cost Accountants, Kiran J. Mehta & Co.,
Cost Accountants, Shri Suresh D. Shenoy, Cost Accountant, Shome & Banerjee, Cost Accountants and Dilip M. Malkar & Co., Cost Accountants;
(iii) For Polyester Business - V.J. Talati & Co., Cost Accountants, Shri Suresh D. Shenoy, Cost Accountant, and V. Kumar & Associates, Cost Accountants;
(iv) For Electricity Generation - Dilip M. Malkar & Co., Cost Accountants;
(v) For Petroleum Business - Shri Suresh D. Shenoy, Cost Accountant;
(vi) For Oil & Gas Business - V.J. Talati & Co., Cost Accountants and Shome & Banerjee, Cost Accountants.
Shome & Banerjee, Cost Accountants, were nominated as the Company''s Lead Cost Auditors.
SECRETARIAL AUDITOR
The Board appointed Dr. K.R. Chandratre, Practising Company Secretary, to conduct Secretarial Audit for the FY 2016-17. The Secretarial Audit Report for the financial year ended March 31, 2017 is annexed herewith marked as Annexure V 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 year. Particulars 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 CSR&G 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 is put on the Company''s website and can be accessed at: http://www.ril.com/InvestorRelations/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 utilized by the recipient are provided in the standalone financial statement Please refer Note 2, 3, 6, 9, 30 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 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, as amended, 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 also 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
The Board of 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. Issue 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 Employees'' Stock Option Scheme referred to in this Report.
4. 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.
5. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
6. 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.
7. No fraud has been reported by the Auditors to the Audit Committee or the Board.
ACKNOWLEDGEMENT
The Board of 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. The Boards of Directors also wish to place on record its 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, April 24, 2017
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 (Âthe 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 Âgoing 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
Ã
(i) For the textiles business - M/s. Kiran J. Mehta & Co, Cost
Accountant;
(ii) For the chemicals business à 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 à 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 CompanyÃs policy to pay sustainable dividend linked
to long term performance, keeping in view the CompanyÃs 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. MoodyÃs and S&P have reaffirmed investment
grade ratings for international debt of the Company, as Baa2 and BBB,
respectively. The CompanyÃs international rating from S&P is higher
than the countryÃs sovereign rating. Strong credit ratings by leading
international agencies reflect the CompanyÃs financial discipline and
prudence.
Employees Stock Option Scheme
The Company implemented the Employees Stock Option Scheme (ÃÃSchemeÃÃ)
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.
ManagementÃs Discussion and Analysis Report
ManagementÃs 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
GovernmentÃs policies, or to discriminate amongst various consumers.
The judgment of the HonÃble 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
ManagementÃs 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 Ãgroupà are disclosed in the Annual Report for
the purpose of the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997.
Directorsà Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directorsà 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 Ãgoing concernà 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 Auditorsà 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 Auditorsà 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
Ã
(i) For the textiles business - Shri S. N. Bavadekar, Cost Accountant;
(ii) For the chemicals business à 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 à 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 Directorsà 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 RelianceÂs 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
CompanyÂs 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 shareholdersÂ
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 CompanyÂs 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
ManagementÂs 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 Âgroup 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 Âgoing 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 IndiaÂs 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 CompanyÂs policy to pay sustainable dividend linked
to long term performance, keeping in view the CompanyÂs 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. MoodyÂs and S&P have reaffirmed investment grade ratings for
international debt of the Company, as Baa2 and BBB, respectively. The
CompanyÂs international rating from S&P is higher than the countryÂs
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 (Âthe SEBI
GuidelinesÂ). 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
ÂEarnings 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.
ManagementÂs Discussion and Analysis Report
ManagementÂs 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 CompanyÂs 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 worldÂs 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, RelianceÂs 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 CompanyÂs holding in RPL and helped to broadbase the
shareholding of RPL, besides unlocking value for the CompanyÂs
shareholders.
Reliance Retail Limited (RRL), another subsidiary of the Company,
launched its first store in November 2006 through its convenience store
format ÂReliance FreshÂ. 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 ÂReliance Digital store in April 2007 and its first
and IndiaÂs largest hypermarket ÂReliance 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 ÂReliance WellnessÂ. 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
ManagementÂs 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 Âgroup as defined under the
Monopolies and Restrictive Trade Practices (ÂMRTPÂ) 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 Âgoing 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 IndiaÂs 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 counterÂcurrent 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 areÂincrease 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