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PROJECT REPORT ON

CORPORATE PUBLISHED ANNUAL REPORT

IN THE SEATUBJECT OF

ADVANCE FINANCIAL ACCOUNTING

SUBMITTED BY

SHRIKANT SAHU

IN THE ACADEMIC YEAR 2015-16

UNIVERCITY OF MUMBAI

UNDER THE GUIDANCE

Prof. RAJIV MISHRA

SUBMITTED FOR QUALIFYING IN

M.COM SEMESTER –I EXAMINATION

V.K KRISHANA MENON COLLAGE OF

COMMERCE AND ECONOMICS & SHARAD

SHANKAR DIGHE COLLEGE OF SCIENCE

BHANDUP(EAST),

MUMBAI-400042

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CERTIFICATE

This is to certified that project in the subject of Advance Financial

Accounting undertaken by Mr. “Rajiv Mishra “ , Mcom Semester I

Examination (Academic Year 2015-16 ) has not been submitted for any other

examination and does not form part of any courses under gone by the

candidate . It is further certified that he have completed all required phases of

the project.

------------------------ ----------------------------Internal Examiner College Seal

------------------------ -------------------------------External Examiner Principal

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DECLARATION

I , SHRIKANT SAHU of M.COM Semester-I , Roll No . 48.

Hereby declare that the Project Title “CORPORATE PUBLISHED ANNUAL REPORT”

, submitted by me , In the subject of “ADVANCE FINANCIAL ACCOUMTING” during

the year 2015-16 is based on original work Carried by me Under the guidance and

supervision of “Prof . Rajiv Mishra”.

I further State that this work is original and not submitted in any other

university for any other examination

SHRIKANT SAHU

ROLL .NO – 48

--------------------

(Signature)

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ACKNOWLEDGEMENT

This Project on is a result of co- operative , hard work and good

Wishes of many people . It Would not have been possible without the

Kind support and help of many individuals and would like to extend my

Sincere thanks to all of them.

My sincere thanks to V .K KRISHNA MENON COLLEGE for their

guidance and constant supervision as well as for providing

necessary information regarding the project & also for their

support in completing the project.

My special gratitude and thanks to Mr. P.A Menon chairman of

V. K KRISHANA MENON COLLEGE , Mrs. SAROJ PHANDNIS The

Principal for their constant guidance and giving me an Opportunity

to do a project work.

My sincere thanks also goes to “Prof RAJIV MISHRA “, Project

guide for 100% attention throughout the project and his kind co-

operation and encouragement which helped me in completion of

this project.

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CONTENTS

CHAPTER 1

INTRODUCTION

OBJECTIVE OF THE STUDY

NEED AND IMPORTANCE OF STUDY

SOURCE OF THE DATA

METHODOLOGY

SCOPE OF THE STUDY

LIMITATIONS OF THE STUDY

CHAPTER 2

COMPANY PROFILE

CHAPTER 3

DATA ANALYSIS AND INTERPRETATION

CHAPTER 4

FINDINGS

CONCLUSION AND SUGGESTIONS

BIBILOGRAPHY

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Annual ReportINTRODUCTION

Annual reports are formal financial statements that are published yearly and sent to company stockholders and various other interested parties. The reports assess the year's operations and discuss the companies' view of the upcoming year and the companies' place and prospects. Both for-profit and not-for-profit organizations produce annual reports.

Annual reports have been a Securities and Exchange Commission (SEC) requirement for businesses owned by the public since 1934. Companies meet this requirement in many ways. At its most basic, an annual report includes:

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General description of the industry or industries in which the company is involved.

Audited statements of income, financial position, cash flow, and notes to the statements providing details for various line items.

A management's discussion and analysis (MD&A) of the business's financial condition and the results that the company has posted over the previous two years.

A brief description of the company's business in the most recent year.

Information related to the company's various business segments.

Listing of the company's directors and executive officers, as well as their principal occupations, and, if a director, the principal business of the company that employs him or her.

Market price of the company's stock and dividends paid.

Some companies provide only this minimum amount of information. Annual reports of this type usually are only a few pages in length and produced in an inexpensive fashion. The final product often closely resembles a photocopied document. For these companies, the primary purpose of an annual report is simply to meet legal requirements.

Objectives of the study

To calculate the important financial ratio of the organisation as

a part of the ratio analysis thereby to understand the changes

the needs and trends in the firm’s financial position.

To assess the performance of B.H.E.L on the basis of earnings

and also to evaluate the solvency position of the company.

To identify the financial strengths and weaknesses of the

organization.

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To give the appropriate suggestions to the investors. To help

them to make more informed decisions.

Need and importance of study

Financial performance of an enterprise will affect other types of performance

and also the productivity of finances is good, the productivity of men and

material would be good.

Moreover the study of non-economic and qualitative performance, which

studies the non economic factors like customer satisfaction, citizen satisfaction

etc.

Source of data

The data is collected from the following sources.

Three year annual report of BHEL from 2007-2010

Interaction with the related finance department.

METHODOLOGY

The study carried with the cooperation of the management who

permitted to carry on the study and provided the requisite data collected from

the following sources.

Primary data

Secondary data

PRIMARY DATA

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The information collected directly without any reference is primary

data. In the study it is mainly through conversation with concerned officers or

staff members either individually or collectively. The data includes:

1. Conducting personal interview with the officers of the company.

2. Individual observation and inferences.

3. From the people who are directly involved with the transaction of

the firm.

Secondary data

Study has been taken from secondary sources i.e. published annual

reports of the company editing, classifying and tabulation of the financial data.

For this purpose performance data of BHEL for the years 2007-2008 to 2009-

2010 has been used.

Scope of study

The scope and period of the study is being restricted to the following.

1. The scope is limited to the operations of the BHEL.

2. The information is obtained from the primary and secondary data was

limited to the BHEL.

3. The profit and loss, the balance sheet was on the last six years.

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4. Comparison analysis was done by comparison of sister units.

Limitations of study

1. The study is confined to a period of last 4 years.

2. As most of the data is from the secondary sources, hence the accuracy is

limited.

The main purpose and objectives of annual reports

The purpose of the annual report is to inform shareholders as to the financial status of a company. Coy and Pratt (1998) conclude that the annual report serve as aCOMMUNICATION tool and determines the reality of the organization in the public mind. However for this reality to be recognized, it depends on the quality of information provided in the annual reports. Annual reports are extremely significant sources of company information (Stanga,1976). Furthermore studies by Chang and Most (1985) and Hawkins and Hawkins (1985) concluded that even though individual investors do not find the annual report useful in decision making and do not meet their

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information needs, still the annual report is the document used as reference for investors and managers. Though annual report is not the only source of information for a company, as in New Zealand newspapers and magazines were also found as a source of information, nevertheless the annual report is considered to be an important resource due to its large reporting and availability. Therefore the fundamental aims of preparing financial reports are for decision making and accountability.

AccountabilityAnnual reports are considered as the main accountability mechanism. In 1975, the American Accounting Association (AAA) defined the purpose of accounting as "to provide information for making useful economic decisions and which, if provided will increase social welfare". Thus annual report can be one tool forCOMMUNICATING economic information to allow update decisions and judgements by users.

According to Stanton and Stanton (2002) the annual report "uses the tools of management,MARKETING and communication theory to construct a picture of the organization". Thus, annual report is a tool for a firm to classify its accountability for managing and controlling business activities. Moreover, a number of researchers (Winfield, 1978; Chang and Most, 1985; Boyne and Law, 1991), have noted the importance of annual reports as a 'vehicle' releasing accountability.

Furthermore accountability is involved in the monitoring, evaluation and control of organizational agents to make sure that they perform in the welfare of shareholders and other stakeholders (Keasey and wright,1993). It can be classified as a requirement for one party to another party for its performance over certain time. In short, accountability is simply a must to report upon as it gives an extent to which an entity has met its responsibilities towards its owners and to fulfill this role,FINANCIAL reports should reflect the nature and extent of performance that are related to the entity. Moreover accountability requires broadening the capacity of disclosure beyond the financial focus to ensure that adequate and meaningful qualitative information is also contained in the annual report.

Besides, the owners of the companies, the shareholders, have a right to know what actions and what developments are taking place within the organization. Thus, the organizations are accountable to its shareholders and the annual report plays a great role in conveying the firm's performances to them.

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Decision makingAs per IAS 1, the financial statements' objective is to offer and inform the performance and the evolution of the financial situation, that could be helpful to a wide range of potential users for evaluating and making economic decisions .It is further claimed that, when the general purpose of financial reports meet this objective, they will also enable entities to discharge accountability.

Consequently the first aim of the Trueblood Report is the provision of information for economic decision making is being interpreted as being the primary function of financial statements. Hence financial reports should seek to satisfy the information needs of users. In 1989, the Solomons Report, commissioned by the ICAEW (1989) reaffirmed that decision usefulness is the fundamental aim of financial reporting. Financial reports should provide information that will be accommodating to several users who have interest in financial performance and making decisions about investing and lending.

Gray (1994, pp9), have proved that accounting literature is presently dominated by the idea of decision usefulness which mean that financial reporting will have to be maintained in order to meet the need of all users of accounting information. It is seen that nowadays there has been a rise in the users of accounting information for decision making hence objectives of annual reports are regarded as the major means by which companies distribute information to the external users (Firth, 1979).

OBJECTIVES OF ANNUAL REPORTSAccording to FASB the main goals of annual reports can be classified in three parts:

Objectives for making potential economic decisions; Objective of providing information about theFINANCIAL position,

performance and changes in financial position of an entity; Objectives for presenting and disclosing of information.

Hence it is the attributes of the qualitative characteristics that make accounting information to be useful in annual reports.

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CONTENTS OF FINANCIAL REPORT

Financial statements primarily comprise two basic statements:

1. The position statements of the balance sheet.

2. The income statements or the profit and loss account.

Accounting principles specify that a complete set of financial statements must

include:

1. A balance sheet

2. An income statement

3. A statement of change in owners accounts.

4. A statement of changes in financial position.

BALANCE SHEET:

The balance sheet is one of the important statements

depicting the financial strength of concern. It shows the properties that are

owned on one hand and on the other hand the sources of the assets owned by the

concern and all the liabilities and claims it owes to owners and outsiders. The

balance sheet is prepared on a particular date. The right hand shows properties

and assets and the left hand shows liabilities.

INCOME STATEMENT OR PROFIT AND LOSS ACCOUNT:

Income statement is prepared to determine the operation position of the

concern. It is a statement of revenues. The income statement may be prepared in

the form of manufacturing account to find out the cost of the production in the

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form of trading accounts to determine gross profit or loss, in the form of profit

and loss account to determine net profit or net loss.

STATEMENT OF CHANGES IN OWNERS EQUITY:

The term owners equity refers in the claims of the owners of the

business against the assets of the firm. It consist of two elements.

1. Paid up share capital i.e. the initial amount of funds invested by the

shareholders.

2. Retained earnings/reserves and surplus representing undistributed profits.

The statement of changes in owners equity simply shows

the beginning balance of each owners equity account, the reasons of

increases and decreases in each, and its ending balance. However, in most

cases the owners equity account changes significantly in retain earnings

and hence the statement of changes in owners equity becomes merely a

statement of retained earnings.

STATEMENT OF CHANGES IN FINANCIAL POSITION:

The basic financial statement i.e. the balance sheet and profit and loss

account and income statement of a business reveals the net effect of various

transactions on the operational position of the company. But there are many

transactions that do not operate through profit and loss account. Those for a

better understanding another statement of changes in financial position has to be

prepared to show the changes in assets and liabilities from the end of another

point of time. The statement of changes in financial position may take any of

the two forms. They are:

Funds statements

Cash flow statements

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TOOLS OF FINANCIAL ANALYSIS USED IN THE STUDY:

MEANING OF COMPARATIVE STATEMENT:

The comparative financial statements are the statements of the

financial position of different periods; the elements of financial positions are

then in a comparative form to give idea of financial position of two or more

periods. The comparative statement may show:

Absolute figures

Changes in absolute figures i.e. increase or decrease in absolute figures.

Absolute data in terms of percentage.

Increase or decrease in terms of percentage.

COMPARATIVE BALACE SHEET:

It is a statement of financial position of a business at a specific

movement of time. It represents all assets owned by the business at a particular

movement of time and the claims of the owners and outsiders against those

assets at the time. It is a way they shape the financial condition of the business

at that time.

The important distinction between an income statement and

balance sheet is that the income statement is for a period where as balance sheet

is on a particular date.

COMPARATIVE INCOME STATEMENT:

The comparative income statement gives the results of the

operation of a business. The comparative income statement gives an idea of the

program of a business over a period of time. The changes in absolute data in

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money values and percentages can be determined to analyze the profitability of

the business.

GUIDELINES FOR INTERPRETATION OF INCOME STATEMENT:

The analysis and interpretation of income statement will involve

the following steps:

1. The increase or decrease in sales should be compared with the

increase or decrease in cost of goods sold. An increase in sales will

not always mean an increase in profit. The profitability will

improve if increase in sales promotion and the control of operating

expenses.

2. The second step of analysis should be the study of operation profit.

The operating expenses such as office and administrative expenses.

Selling and distribution expenses should be deducted from gross

profit to find out operating profit which will result from the

increase in sales position and control of operating expenses.

3. The increase or decrease in net profit give an idea about overall

profitability of the concern, non-operating expenses such as interest

paid, loss from sale of assets, writing off to deferred expenses or

deducted from operational profit we get the figure of operating

profit.

4. An opinion should be formed about profitability of the concern and

it should be given at the end. This should be mentioned whether the

overall profitability is good or not.

COMMON SIZE STATEMENTS:

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The common size statement, balance sheet and income statement

are shown in analytical percentages. The figures are shown as percentages of

total assets, total liabilities and total sales. The total assets are taken as of and

different assets are expressed as a percentage of the total.

1. Common size balance sheet: A statement in which balance sheet items

are expressed as the ration of each asset to total assets and the ratio of

each liability is expressed as a ratio of total liabilities is called common

sized balance sheet.

2. Common size income statement: The items in income statement can be

shown as percentage of sales to show the relation of each item to sales. A

significant relationship can be established between item of income

statement and value of the sales. The increase in sales will certainly

increase selling expenses and not administrative are financial expenses.

TREND ANALYSIS:

Trend percentages:

The method of trend percentages in useful analytical device

for the management since y substitution of percentage for large amounts, the

clarity and readability are achieved.

Trend percentages are immensely helpful in making

comparative study of the final statements for several years. The method of

calculating trend percentages involves the calculation of percentage relationship

that each item bears to the same item in the base year. The earliest year may be

taken as base year. Each item of the base year is taken as 100 and on the basis

the percentage for each of the item of each year is calculated.

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Least Square Method:

This method is widely used in practised. It is a mathematical

method and with the help of a trend line fitted to the data in such a manner by

using the actual figures of the study period, we have to calculate the trend

values for these periods. Based on this value we can easily forecast the values of

the future period. The method of least square may be used either to fit a straight

line trend or a parabolic trend. The straight line is represented by the equation

Y(C)=A+B(X).

ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENT:

An attempt has been made to analyze and interpret the

financial statements of BHEL for the period of 2007-2010. These statements

were prepared on the basis of the data in the balance sheets and profit and loss

accounts of the BHEL for the above period.

TARGET AUDIENCES FOR ANNUAL REPORTS

Current shareholders and potential investors remain the primary audiences for annual reports. Employees (who today are also likely to be shareholders), customers, suppliers, community leaders, and the community-at-large are also targeted audiences.

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Employees

The annual report serves many purposes with employees. It provides management with an opportunity to praise employee innovation, quality, teamwork, and commitment, all of which are critical components in overall business success. In addition, an annual report can also be used as a vehicle to relate those company successes—a new contract, a new product, cost-saving initiatives, new applications of products, expansions into new geographies—that have an impact on its work force. Seeing a successful project or initiative profiled in the annual report gives reinforcement to the employees responsible for the success.

The annual report can help increase employee understanding of the different parts of the company. Many manufacturing locations are in remote areas, and an employee's understanding of the company often does not go beyond the facility where he or she works. An annual report can be a source for learning about each of a company's product lines, its operating locations, and who is leading the various operations. The annual report can show employees how they fit into the "big picture."

Employees also are often shareholders. So, like other shareholders, these employees can use the annual report to help gauge their investment in the company. In this case, the annual report can serve as a reminder to employees of the impact that the work they do has on the value of the company's stock value.

Customers

Customers want to work with quality suppliers of goods and services, and an annual report can help a company promote its image with customers by highlighting its corporate mission and core values. Describing company initiatives designed to improve manufacturing processes, reduce costs, create quality, or enhance service can also illustrate a company's customer orientation. Finally, the annual report can also show the company's financial strength. Customers are reducing their number of suppliers, and one evaluation criterion is financial strength. They want committed and capable suppliers that are going to be around for the long term.

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Suppliers

A company's abilities to meet its customers' requirements will be seriously compromised if it is saddled with inept or undependable suppliers. Successful companies today quickly weed out such companies. By highlighting internal measurements of quality, innovation, and commitment, annual reports can send an implicit message to suppliers about the company's expectations of outside vendors. Sometimes an annual report will even offer a profile of a supplier that the company has found exemplary. Such a profile serves two purposes. First, it rewards the supplier for its work and serves to further cement the business relationship. Second, it provides the company's other suppliers with a better understanding of the level of service desired (and the rewards that can be reaped from such service).

The Community

Companies invariably pay a great deal of attention to their reputation in the community or communities in which they operate, for their reputations as corporate citizens can have a decisive impact on bottom-line financial performance. A company would much rather be known for its sponsorship of a benefit charity event than for poisoning a local river, whatever its other attributes. Annual reports, then, can be invaluable tools in burnishing a company's public image. Many annual reports discuss community initiatives undertaken by the company, including community renovation projects, charitable contributions, volunteer efforts, and programs to help protect the environment. The objective is to present the company as a proactive member of the community.

This sort of publicity also can be valuable when a company is making plans to move into a new community. Companies seek warm welcomes in new communities (including tax breaks and other incentives). Communities will woo a company perceived as a "good" corporate citizen more zealously than one that is not. The good corporate citizen also will receive less resistance from local interest groups. The company's annual report will be one document that all affected parties will pore over in evaluating the business.

Investors

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Investors need information to decide whether they should continue to invest in an entity, to assess whether that particular organization will be able to pay out dividends as well as how the enterprise has been managed. The investors require information about profitability, volumes, sales, amountsINVESTED , assets owned, share price and information about competitors.

ShareholdersShareholders are the owners of the company. Thus, they have the right to receive dividends from the company's profit. Information in annual reports is very important to shareholders as profit acts as an indicator of the amount of dividends they ought to obtain.

GovernmentThe government group makes use of an annual report for tax purposes. The tax authorities such as the Inland Revenue needs information on the profitability of an entity to levy corporation tax and custom and excise make use of information to check VAT returns. Hence tax authorities use FS information as a source for enhancing social welfare by establishing tax policies.

PUBLICThe public are usually considered as 'stakeholders' and businesses form part of society at large and as a result create much public interest. Marston and Shrives (1991, pp196), found annual report as the main document available for the public thus is being regarded as the main "disclosure vehicle".

In summary, results from preceding studies shows that users believed that annual reports is the main sources of information; though each section was not considered as of equal significance. The results also disclose a necessity to establish some changes to the annual reporting that allow the information to be more understandable and sufficient for potential users.

READING AN ANNUAL REPORT

People read annual reports for widely different purposes and at dramatically different levels. Generalizations, however, are difficult. The stockholder with

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five shares might be as careful and discriminating a reader of an annual report as the financial analyst representing a firm owning one million shares.

It may require an MBA to understand all the details buried in an annual report's footnotes. Nevertheless, a good understanding of a company is possible by focusing on some key sections of the report.

Company Description

Most companies will include a description of their business segments that includes products and markets served. Formats vary from a separate fold-out descriptive section to a few words on the inside front cover. A review of this section provides readers with at least a basic understanding of what the company does.

The Letter

Whether contained under the heading of Letter to Shareholders, Chairman's Message, or some other banner, the typical executive message can often provide some informative data on the company's fortunes during the previous year and its prospects for the future. Readers should always bear in mind that it is invariably in the executive's best interests to maintain a fundamentally upbeat tone, no matter how troubled the company may be. This is often the most widely read portion of the entire annual report, so business owners and managers should make a special effort to make it both informative and engaging.

Management's Discussion and Analysis (MD&A)

This section of an annual report provides, in a fairly succinct form, an overview of the company's performance over the previous three years. It makes a comparison of the most recent year with prior years. It discusses sales, profit margins, operating income, and net income. Factors that influenced business trends are outlined. Other portions discuss capital expenditures, cash flow, changes in working capital, and anything "special" that happened during the years under examination. The MD&A is also supposed to be forward-looking, discussing anything the company may be aware of that could affect results either positively or negatively. An MD&A can be written at all different levels of comprehension, but business consultants generally urge companies to make the information—from balance sheets to management analysis—

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comprehensible and accessible to a general readership. This means forsaking jargon and hyperbole in favor of clear and concise communication.

Financial Summary

Most companies will include a five-, six-, ten-, or eleven-year summary of financial data. Sales, income, dividends paid, shareholders' equity, number of employees, and many other balance sheet items are included in this summary. This section summarizes key data from the statements of income, financial position, and cash flow for a number of years.

Management/Directors

A page or more of an annual report will list the management of the company and its board of directors, including their backgrounds and business experience.

Investor Information

There almost always is a page that lists the company's address and phone number, the stock transfer agent, dividend and stock price information, and the next annual meeting date. This information is helpful for anyone wanting additional data on the company or more information about stock ownership.

PACKAGING THE ANNUAL REPORT

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For most companies, large or small, the financial information and the corporate message are the most important aspects of an annual report. Many companies also want to be sure, however, that their targeted audiences are going to read and understand the message. This is less essential for privately owned businesses that do not need to impress or soothe investors, but they too recognize that disseminating a dry, monotonous report is not in the company's best interests.

The challenge for producers of annual reports is to disseminate pertinent information in a comprehensible fashion while simultaneously communicating the company's primary message. In many ways the annual report serves as an advertisement for the company, a reality that is reflected in the fact that leading business magazines now present awards to company reports deemed to be of particular merit. In recent years, companies have also chosen to make their annual reports available in a variety of electronic media that lend themselves to creative, visually interesting treatments.

Of course, the personality of the company—and perhaps most importantly, the industry in which it operates—will go a long way toward dictating the design format of the annual report. The owner of a manufacturer of hospital equipment is far less likely to present a visually dramatic annual report to the public than are the owners of a chain of suntanning salons. The key is choosing a design that will best convey the company's message.

ANALYSE ANNUAL REPORT OF RELIANCE LTD

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Objective of Study

To understand the information contained in financial statements with a view to know the strength or weaknesses of the firm and to make forecast about the future prospects of the firm and thereby enabling the financial analyst to take different decisions regarding the operations of the firm.

1. To study the present financial system at Reliance Industry.

2. To determine the Profitability, Liquidity Ratios, Cash flow and Fund flow statement.

3. To analyze the capital structure of the company with the help of      Leverage ratio.

4. To offer appropriate suggestions for the better performance of the organization

Research Methodology

Research is defined as a systematic, gathering recording and analysis of data about problem relating to any particular field.

It determines strength reliability and accuracy of the project.

1. Research Design: Research Design pertains to the great research approach or strategy adopted for a particular project. A research project has to be the conducted scientifically making sure that the data is collected adequately and economically.

The study used a descriptive research design for the purpose of getting an insight over the issue. It is to provide an accurate picture of some aspects of market environment. Descriptive research is used when the objective is to provide a systematic description that is as factual and accurate as possible.

2. Method of Data Collection:

Secondary Data: Through the internet and published data

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Company Profile

The Reliance group, founded by Dhirubhai H Ambani (1932-2002), is India’s

largest private sector enterprise, with businesses in the energy and material

value chain. The flagship company, Reliance Industries Limited, is a Fortune

Global 500 company and is the largest private sector company in India. The

chairman of the company is Mukesh Ambani.

The company is India’s largest petrochemical firm and among the country’s

largest companies (along with the likes of Indian Oil and Tata Group). Oil

refining and the manufacture of polyfines account for nearly all of Reliance’s

sales. It also makes textiles and explores for oil and gas, though those

businesses are relatively small. In 2009 the company merged with its oil and gas

refining subsidiary (Reliance Petroleum) in order to boost the operational and

financial synergies of Reliance as a major refining company.

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

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instruments like fully convertible debentures to the Indian stock markets. Ambani was one of the first entrepreneurs to draw retail investors to the stock markets. Critics allege that the rise of Reliance Industries to the top slot in terms of market capitalization is largely due to Dhirubhai's ability to manipulate the levers of a controlled economy to his advantage. Though the company's oil-related operations form the core of its business, it has diversified its operations in recent years. After severe differences between the founder's two sons, Mukesh Ambani and Anil Ambani, the group was divided between them in 2006. In September 2008, Reliance Industries was the only Indian firm featured in the Forbes's list of "world's 100 most respected companies

MISSION & VISION

“Continuously innovate to remain Partners in human progress by Harnessing science & technology in the petrochemicals domain

OUR MISSION

“Be a globally preferred Business associate with responsible Concern for ecology, society, and stakeholder’s value”.

VALUES & QUALITY POLICY YOUR VALUES“Integrity, Respect for People, Unity of Purpose, Outside-in Focus, Agility and Innovation”.

QUALITY POLICY

“Bare committed to meet customers’ requirements through continual improvement of our quality management systems. We shall sustain organizational excellence through visionary leadership and innovative efforts”.

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Reliance Industries Balance Sheets from 2006 to 2009

in Rs. Cr.

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Mar '06 Mar '07 Mar '08 Mar '09

12 months 12 months 12 months 12 months

Sources Of Funds

Total Share Capital 1,393.17 1,393.21 1,453.39 1,573.53

Equity Share Capital 1,393.17 1,393.21 1,453.39 1,573.53

Share Application Money 0.00 60.14 1,682.40 69.25

Preference Share Capital 0.00 0.00 0.00 0.00

Reserves 43,760.90 59,861.81 77,441.55 112,945.44

Revaluation Reserves 4,650.19 2,651.97 871.26 11,784.75

Net worth 49,804.26 63,967.13 81,448.60 126,372.97

Secured Loans 7,664.90 9,569.12 6,600.17 10,697.92

Unsecured Loans 14,200.71 18,256.61 29,879.51 63,206.56

Total Debt 21,865.61 27,825.73 36,479.68 73,904.48

Total Liabilities 71,669.87 91,792.86 117,928.28 200,277.45

Application Of Funds

Gross Block 84,970.13 99,532.77 104,229.10 149,628.70

Less: Accum. Depreciation 29,253.38 35,872.31 42,345.47 49,285.64

Net Block 55,716.75 63,660.46 61,883.63 100,343.06

Capital Work in Progress 6,957.79 7,528.13 23,005.84 69,043.83

Investments 5,846.18 16,251.34 20,516.11 20,268.18

Inventories 10,119.82 12,136.51 14,247.54 14,836.72

Sundry Debtors 4,163.62 3,732.42 6,227.58 4,571.38

Cash and Bank Balance 239.31 308.35 217.79 500.13

Total Current Assets 14,522.75 16,177.28 20,692.91 19,908.23

Loans and Advances 8,266.55 12,506.71 18,441.20 13,375.15

Fixed Deposits 1,906.85 1,527.00 5,609.75 23,014.71

Total Current Assets, Loans &

Advances 24,696.15 30,210.99 44,743.86 56,298.09

Differed Credit 0.00 0.00 0.00 0.00

30

Reliance Industries Profit & Loss Accounts from 2006 to 2009

in Rs. Cr.

Mar '06 Mar '07 Mar '08 Mar '09

12 months 12 months 12 months 12 months

Income

Sales Turnover 89,124.46 118,353.71 139,269.46 146,328.07

Excise Duty 8,246.67 6,654.68 5,463.68 4,369.07

Net Sales 80,877.79 111,699.03 133,805.78 141,959.00

Other Income 546.96 236.89 6,595.66 1,264.03

Stock Adjustments 2,131.19 654.60 -1,867.16 427.56

Total Income 83,555.94 112,590.52 138,534.28 143,650.59

Expenditure

Raw Materials 59,739.29 80,791.65 98,832.14 109,284.34

Power & Fuel Cost 1,146.26 2,261.69 2,052.84 3,355.98

Employee Cost 978.45 2,094.09 2,119.33 2,397.50

Other Manufacturing Exp. 668.31 1,112.17 715.19 1,162.98

Selling and Admin Exp. 5,872.33 5,478.10 5,549.40 4,736.60

Miscellaneous Expenses 300.74 321.23 412.66 562.42

Preoperative Exp. Capitalised -155.14 -111.21 -175.46 -3,265.65

Total Expenses 68,550.24 91,947.72 109,506.10 118,234.17

Operating Profit 3,400.91 4,815.15 4,847.14 5,195.29

PBDIT 0.00 0.00 0.00 0.00

Interest 10,711.18 14,528.75 23,018.14 18,446.66

PBDT 0.88 0.51 48.10 0.00

Depreciation 10,712.06 14,529.26 23,066.24 18,446.66

Other Written Off 1,642.72 2,585.35 3,559.85 3,137.34

Profit Before Tax 9,069.34 11,943.40 19,458.29 15,309.32

Extra-ordinary items 3,400.91 4,815.15 4,847.14 5,195.29

Tax 10,711.18 14,528.75 23,018.14 18,446.66

Reported Net Profit 0.88 0.51 48.10 0.00

Total Value Addition 8,810.95 11,156.07 10,673.96 8,949.83

Preference Dividend 0.00 0.00 0.00 0.00

Equity Dividend 1,393.51 1,440.44 1,631.24 1,897.05

Corporate Dividend Tax 195.44 202.02 277.23 322.40

Per share data (annualized)

31

32

Financial Position of Reliance Industries Ltd.

After going through the various ratios, fund flow and cash flow analysis would

like to state that:

The long-term solvency of the company is very satisfactory.

Immediate solvency position of the company is also quite satisfactory.

The company can meet its urgent obligations immediately.

Credit policies are effective.

Overall profitability position of the company is quite satisfactory.

Dividend payout ratio is satisfactory. Dividend paid in all years to its

shareholders.

The company is paying promptly to the suppliers.

The return on capital employed is satisfactory.

The profitability position of the company is very satisfactory.

Book Value (Rs) 324.03 439.57 542.74 727.66

33

FINDINGS1. The current ratio has shown non fluctuating trend as 1.14, 1.16, 1.38 and 1.23

during 2006, 2007, 2008 and 2009.

2. The quick ratio is also in non fluctuating trend throughout the period 2006 –

09 resulting as 0.67, 0.69, 0.75, 0.78.The Company believes in high

profitability and low liquidity position.

3. The proprietary ratio has shown a non fluctuating trend. The proprietary ratio

is decreased compared with the last year.

4. The stock working capital ratio decreased from 3.21 to 1.39 in the year 2006

– 09.

5. The capital gearing ratio is decreased form 2006 – 08 (0.16, 0.15 and 0.82)

and increased in 2009 to 0.85.

6. The debt-equity ratio increased from 0.44-0.59 in the year 2006-09.

7. The gross profit ratio is in fluctuation manner. It decreased in the current year

compared with the previous year from 23.1% to 18.97%.

8. The net profit ratio is also decreased in the current year compared with the

previous year from 14.54% to 10.78%.

9. The operating ratio is increased in the current year compared with the

previous year from 81.8% to 83.28%.

34

10. The return on capital employed is increased in the year 2006 and 2008 while

it decreased in the year 2007 and 2009.

11. The earning per share is maximum in the year 2007-2008 and minimum in

the year 2005-2006.

12. Dividend payout ratio is maximum in the year 2005-2006 and minimum in

the 2007-2008.

13. Cost of goods sold shows a non fluctuating pattern in the year 2005-2008

and increased in the year 2008-2009.

14. The cash ratio shows a non fluctuating pattern in the year 2006, 2008 and

2009 but decreased in the year 2008.

15. Return on proprietorship fund is maximum in the year 2007-2008 and

minimum in the year 2008-2009.

16. The operating profit ratio shows almost similar pattern in all years but it is

maximum in the year 2006-2007 and minimum in the year 2007-2008.

17..The net working capital available to the company was maximum in the year

2009 shows the high liquidity position of the firm and it was minimum in

the year 2007 shows the low liquidity position of the firm.

35

Suggestion & Recommendation

1. Liquidity refers to the ability of the concern to meet its current obligations as

and when these become due. The company should improve its liquidity

position.

2. The company should make the balance between liquidity and solvency

position of the company.

3. The profit ratio is decreased in current year so the company should pay

attention to this because profit making is the prime objective o every business.

4. The cost of goods sold is high in every year so the company should do efforts

to control it.

5. The long term financial position of the company is very good but it should

pay a little attention to short term solvency of the company.

36

Conclusion

The company’s overall position is at a very good position. The company

achieves sufficient profit in past four years. The long term solvency position of

the company is very good. The company maintains low liquidity to achieve the

high profitability. The company distributes dividends every year to its share

holders. The profit of the company decreased in the last year due to maintaining

the comparatively high liquidity. The net working capital of the company is

maximum in the last year shows the maximum liquidity.

37

BibliographyREFERENCE BOOKS –

FINANCIAL MANAGEMENT

Theory, Concepts & problems

ANAUAL REPORTS OF RELIANCE INDUSTRIES LIMITED

2005-2006

2006-2007

2007-2008

2008-2009

WEBSITES -

www.ril.com

www.moneycontrol.com

www.wikipedia.com