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Home > Equity Market > Reliance Industries Ltd.- Director's Reports >

Reliance Industries Ltd.- Director's Reports

Industry: Diversified
BSE Code :500325
NSE Code :RELIANCE
Business Group:Ambani Group
LTP (Rs.) :952.7  (0.74%) [NSE]
ISIN No :INE002A01018
Face Value/M Lot :10.00/1
P/E Ratio : 14.02
Market Cap : 308160.73 Cr
You can view full text of the latest Director's Report for the company.
Year End : 03 / 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

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