A FINANCIAL ANALYSIS REPORT

RELIANCE
INDUSTRIES LTD.

Prepared by : Dhaval H. Devmurari

Roll No. : 15050 Div.-B
Submitted to : Dr. P.K.Priyan

G.H.Patel P.G Institute of Business management

Sardar Patel University V.V.Nagar

Batch: 2015-17

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 PREFACE

Financial management is the subject which teaches us about the

current scenarios which are prevailing in the industries and which
are helpful in understanding the Indian market. I got an opportunity
to analyze the financial reports of a large scale manufacturing
industry.
As a part of our MBA, we are assigned various projects under
different subjects to impart practical know-how of the industry.

This report is a study of RELIANCE INDUSTRIES LIMITED under

the subject Financial Management.

In this report I have compiled the information pertaining to

RELIANCE INDUSTRIES LIMITEDs Ratio Analysis, Cash-Flow-
Statement

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 ACKNOWLEDGEMENT

I would like to express my extreme gratitude to

Dr. P.K.Priyan, Professor and Faculty (MBA), GHPIBM for his moral
support and encouragement for giving me this opportunity to carry
out this analysis. During our regular lectures, we had learnt about
the financial analysis of companies through ratio analysis, cash flow
statement and so on. With the help of this study, I came to know
about the actual financial position of a company.

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 TABLE OF CONTENT

INTRODUCTION OF A RELIANCE INDUSTRIES LIMITED .4

RATIO ANALYSIS
DU-PONT RATIO ANALYSIS
ANALYSIS OF CASH-FLOW STATEMENT
SUSTAINABLE GROWTH
RATE.........................................................................23
BIBLIOGRAPHY4

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INTRODUCTION OF RELIANCE INDUSTRIES LTD.

The inc.was co-founded by Dhirubhai Ambani and his brother

Champaklal Damani in 1960s as Reliance Commercial Corporation.
In 1965, the partnership was ended and Dhirubhai continued the
polyester business of the firm. In 1966, Reliance Textiles Industries
Pvt. Ltd was incorporated in Maharashtra. It established a synthetic
fabrics mill in the same year at Naroda in Gujarat.In 1975, the
company expanded its business into textiles, with "Vimal" becoming
its major brand in later years. The company held its Initial public
offering (IPO) in 1977. The issue was over-subscribed by seven
times.[1] In 1979, a textiles company Sidhpur Mills was amalgamated
with the company. In 1980, the company expanded its polyester yarn
business by setting up a Polyester Filament Yarn Plant in Raigad,
Maharashtra with financial and technical collaboration with E. I. du
Pont de Nemours & Co., US.
In 1985, the name of the company was changed from Reliance
Textiles Industries Ltd. to Reliance Industries Ltd. During the years
1985 to 1992, the company expanded its installed capacity for
producing polyester yarn by over 145,000 tonnes per annum. The
Hazira petrochemical plant was commissioned in 199192. In 1993,
Reliance turned to the overseas capital markets for funds through a
global depositary issue of Reliance Petroleum. In 1996, it became
the first private sector company in India to be rated by international
credit rating agencies. S&P rated BB+, stable outlook, constrained
by the sovereign ceiling. Moody's rated Baa3, Investment grade,
constrained by the sovereign ceiling. In the year 199596, the
company entered the telecom industry through a joint venture with
NYNEX, USA and promoted Reliance Telecom Private Limited in
India. In 199899, RIL introduced packaged LPG in 15 kg cylinders
under the brand name Reliance Gas. During 19982000, the

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company completed setup of integrated petrochemical complex at
Jamnagar in Gujarat.
Operations
The company's petrochemicals, refining, and oil and gas-
related operations form the core of its business; other divisions of
the company include cloth, retail business, telecommunications and
special economic zone (SEZ) development. In 201213, it earned
76% of its revenue from Refining, 19% from Petrochemicals, 2%
from Oil & Gas and 3% from Other segments.

In July 2012, RIL informed that it was going to invest US$1 billion
over the next few years in its new aerospace division which will
design, develop, manufacture, equipment and components,
including airframe, engine, radars, avionics and accessories for
military and civilian aircraft, helicopters, unmanned airborne vehicles
and aerostats.

Major subsidiaries and associates

On 31 March 2013, the company had 123 subsidiary
companies and 10 associate companies.

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RATIO ANALYSIS
Ratio analysis is a powerful tool for the interpretation of the
financial statement. A ratio can be defined as the indicated
quotient of two mathematical expressions in financial analysis
the ratio is used as the benchmark for evaluating the financial
position and performance of a firm.
The relation between two accounting figures, expressed
mathematically, is known as financial ratios.
The types of ratios

1 Liquidity Ratios Measure the firms ability to meet current

obligations.
2 Leverage Ratios Measure the proportion of debt and equity in
financing the assets.
3 Profitability Ratios Measure overall performance and
effectiveness of the firm.
Activity Ratios Measure the firms efficiency in utilizing its assets

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LIQUIDITY RATIOS
There are two types of liquidity ratios
1 Current ratio = current assets/current liabilities
2 Quick ratio = (current assets-inventory)/ current liabilities

1) CURRENT RATIO:

In 2011 the current ratio was 1.14:1 in 2012 this ratio increasing
from 1.14:1 to 1.42:1.
In 2013 the current ratio decrease from 1.42:1 to 1.31:1
It is still decreased in 2014 from1.31:1 to 1.12:1
In 2015 this ratio was 0.61:1
If we see in overall 5 year data we can say that Reliance industries
ltds current liability is more increase as compare to current asset
level from 2012 to 2014 the current ratio continuous decreasing, in
2012 this ratio was 1.42:1 and in 2015 it was 0.61:1
It nearly half in 2015 as compare to 2012.

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 Current Ratio
1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2011 2012 2013 2014 2015

2) QUICK RATIO:

Quick ratio = (current assets-inventory)/ current liabilities

In 2011 the Quick ratio was 0.69:1 in 2012 this ratio increasing
from 0.69:1 to 0.88:1.
In 2013 the Quick ratio decrease from 0.88:1 to 0.77:1
It is still decreased in 2014 also from 0.77:1 to 0.58:1
In 2015 this ratio was 0.19:1
If we see in overall 5 year data we can say that Reliance industries
ltd. quick ratio continuous decreasing from 2012 to 2015, in 2012
this ratio was 0.88:1 but we seen in 2015 this ratio would be 0.19:1

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 Quick Ratio
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2011 2012 2013 2014 2015

LEVERAGE RATIO
1) DEBT/EQUITY RATIO:

The debt equity ratio of this company in 2011 19.38%

It is decreasing by 1.46% in 2012 compare to 2011.
It is further decreased by 1.03% in the year of 2013
Then this ratio picked-up by 9.56% in the year of 2014
In the year of 2015 this ratio was 27.55% it was increased by 1.1%
compare to previous year 2014.
If we seen this five year ratio we can say that it is up down from
2011 to 2015 it was decreased, then after this ratio was increasing
till 2015.
In earlier years company reduces the debt till 2013 but after the
2013 company increase the level of debt.

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 Debt-Equity Ratio
30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2011 2012 2013 2014 2015

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2) DEBT TO CAPITAL EMPLOYED RATIO:

Debt / Debt + Equity

The debt to capital employed ratio of 2011 was 95.05%

In 2012 this ratio was 94.71% it was decreased by 0.34% compare
to 2011.
In 2013 it was still decreased 0.31% in this year the ratio was
94.4%
But this ratio was increase by 1.96% in the year of 2014 and the
ratio was 96.36%
This ratio was again increase in 2015 by 0.14% compare to
previous year 2014
Here also this ratio was up-down in earlier stage it was decrease
up to 2013 and then after it was increased.
Which was highest in 2014 and 2015

Debt to Capital employed Ratio

97.00%

96.50%

96.00%

95.50%

95.00%

94.50%

94.00%

93.50%

93.00%
2011 2012 2013 2014 2015

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 3) COVERAGE RATIO:

EBIT/ INTEREST

Coverage ratio was 11.84% in the year of 2011.

It was decrease in the year of 2012 by 1.19%
It was again decrease by 1% in the year of 2013
This ratio was 9.68% in the year of 2014
It was increased in 2015 by 3.77% and the ratio was 13.45 % in
2015
This ratio was highest in the year of 2015 because of in this year
the EBIT is higher compare to other years and also the interest
would be lower compare to other years.

Coverage Ratio
16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2011 2012 2013 2014 2015

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1) PAT MARGIN RATIO:

During years 2014-2015 PAT Margin shows slight change. In year

2014 PAT Margin was 5.63% & in 2015 it was to 6.9%, this change
was due to change in sales & operating expenses.
In 2013 PAT Margin became little higher as compare to 2014. This
was because of lower sales as compare to 2014, but the profit
change is little. While In 2012, PAT Margin was higher as compare
to 2013.
In the year 2011 PAT margin ratio was highest in compare to other
years.

PAT Margin Ratio

9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2011 2012 2013 2014 2015

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ROE-RETURN ON EQUITY:
ROE is 13.89% in the year of 2011
It was decrease in the year of 2012 by 1.59 % as compare to
2011
It was 11.74% in the year of 2013, it was again decreased as
compare to 2012
ROE was still decreasing in the year of 2014 by 0.59% as
compare to 2013, here we can seen that the ROE is continue
decrease.
Even also in the year 2015 it was also decreased from 11.15% to
10.51%
It was happened that because of company continue to increase
reserve and surplus that is the reason for decrease the ROE and
the on other hand the PAT was increasing but slow rate.

ROE
16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2011 2012 2013 2014 2015

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 ROI ( Return on Investment )
= EBIT / CAPITAL EMPLOYED
The ROI of this company in the year 2011 was 41.33% such a
huge ROI we can say that.
It was increased in 2012 from 41.33% to 45.90%.
Again ROI shoot up from 45.90% to 50.76% in the year of 2013.
But it was collapse in the year 2014 by 15.79% because there
was huge change in capital employed it was change from 57752
(2013) to 88713 (2014), while the EBIT change but lower rate as
compare to capital employed.
In 2015 the ROI again fall down by 0.51% due increase in capital
employed.
In this 5 year the ROI was up down from 2011 to 2013 it was
shoot up, followed by that in the year of 2014 and 2015 it was fall
down.

ROI
60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2011 2012 2013 2014 2015

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 EFFICIENCY RATIO
ASSET-TURNOVER RATIO(ATR):

This ratio was 1.18 times in the year of 2011.

It was increased by 0.31times in the year of 2012 and ratio was
1.49 times
It was again increased from 1.49 times to 1.54 times in the year of
2013
But this ratio was decreased in the year of 2014 from 1.54 times to
1.38 times it was decreased because of increasing the total asset.
Same things happen in the 2015 the ratio was down from 1.38
times to 1.07 times, due to increasing the assets level.
Here huge changes in asset in the 2011 it was 2,09,510 cr. And in
2015 it was 3,29,076 cr. Increase almost 1,19,566 cr. from 2011 to
2015

ASSET TURN OVER RATIO

1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2011 2012 2013 2014 2015

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 FIXED ASSET TURNOVER RATIO(FATR):

This ratio was up down during the year 2011 to 2015

In the year 2011 the ratio was 1.33 times
It was increased by 0.58 time in the year of 2012 as compare to
2011
It was still increased in the year 2013 by 0.09 time
But the ratio was starting the fall down in the year of 2014 it was
fall down by 0.36 time
Again it was fall down in the year 2015 by 0.55 times because of
sales was fall in the year of 2015 as compare to 2014 and on other
hand fix asset was increased.

F.A.T.O
2.5

1.5

0.5

0
2011 2012 2013 2014 2015

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CURRENT ASSET TURNOVER RATIO(CATR):

From 2011 to 2015 this ratio was increasing year to year by 3.34
times to 6.23 times.
In the year of 2011 the ratio was 3.34 times.
It was increased by 0.16 time in the year 2012 and this ratio was
same in the year of 2013 also 3.5 times
In the year of 2014 this ratio was 4.32 time it increase almost 0.82
time.
Again the ratio was increase in the 2015 by1.91 times as compare
to previous year.
This ratio was increase continuously because of increase of
current asset from 2011 to 2015.
This is the reason behind this ratio was keep on increasing trend.

C.A.T.O
7

0
2011 2012 2013 2014 2015

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DU-PONT RATIO ANALYSIS
What is the 'DuPont Analysis?
The DuPont analysis is a method of performance
measurement that was started by the DuPont Corporation in the
1920s. With this method, assets are measured at their gross book
value rather than at net book value in order to produce a higher
return on equity (ROE). It is also known as "DuPont identity".

DuPont analysis tells us that ROE is affected by three things:

- Operating efficiency, which is measured by profit margin
- Asset use efficiency, which is measured by total asset turnover
- Financial leverage, which is measured by the equity multiplier

= GP EBIT SALES EBT EAT C.E

Sales GP CAP. EMPLO EBIT EBT N.W

From 2011 to 2015 this ratio was continuous decreased, because

of net worth is increase by every year while other component of
this ratio was increase but lower rate as compare to the net worth.
In the year of 2011 this ratio was 13.89%.
It was decreased in 2012 by 1.59% as compare to 2011
It was again decreased in the year of 2013 from 12.3% to 11.73%
It was still declining in the year of 2014 and 2015 also in 2014 this
ratio was 11.15% and in 2015 10.51%
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 So, this ratio was declining trend in nature for this five year 2011 to
2015

DU-PONT RATIO
16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2011 2012 2013 2014 2015

ANALYSIS OF CASH-FLOW STATEMENT

Cash Flow from Operating Activities:
Cash flow from operating activities in year 2011 was 33280,
which was increased to 25750 in year 2012.
In year 2013 cash flow from operating activities was 32995.
In year 2014 cash flow from operating activities was 42160.
In year 2015 cash flow from operating activity were 35285 it was
decreased as compare to year 2014.
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 Cash Flow from Operating activities
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2011 2012 2013 2014 2015

Cash used in Investing Activities:

From year 2011 the cash which was used in investing activities
was 20333.
In 2012 in was just 3046 it means that it is reduce as compare to
previous year.
In years 2013 the amount was high as compare to 2012 it was
14979
It was shooting up in the year of 2014 from 14979 to 64013.
This cash used in investing activities in the year of 2015
decreased to 55998.

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 So, after shows this five year data of cash flow we can say that
the Reliance Industries limited investing more and more money
by every year.

Net Cash used in Investing activities

0
2011 2012 2013 2014 2015
-10000

-20000

-30000

-40000

-50000

-60000

-70000

Cash Flow from Financing Activities:

In the year of 2011 the cash used in financing activity was it 725.
Which was negative (11465) in the year of 2012.
It was again negative (8249) in the year 2013.
But the cash used in financing activity in the year was positive by
5530
But in the year of 2015 this figure was again negative by (940)
So, we can say that the Reliance Industries limited investing more
and more money

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 Net Cash used in Financing Activity
10000

5000

0
2011 2012 2013 2014 2015

-5000

-10000

-15000

SUSTAINABLE GROWTH RATE

The growth of the company in the year of 2011 was 9.69%
It was increase from 9.69% to 11.75% in the year 2012,
because of the ROE is higher as compare to previous year
2011.
But the growth was fall down in the year of 2013 by 1.13%
because of retention ratio was lower as compare to 2012 and
ROE almost same.
In the year of 2014 growth rate was increase from 10.62% to
11.07%.
In 2015 it was again shooting up by 1.37% because of the ROE
is higher and retention ratio almost same.
If we seen overall five year graph it was up down trend. In 2012
it was increase but in 2013 it was down and again increase till
the 2015.

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 SUSTAINABLE GROWTH RATE
14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2011 2012 2013 2014 2015

BIBLIOGRAPHY

https://en.m.wikipedia.org
http://m.moneycontrol.com

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