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Reliance Industries
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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    Mar 12
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 (.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 (.9 billion)
 
 - Gross Refining Margin was $ 9.2 / bbl for the year ended March 31,
 2013
 
 The consolidated revenue from operations of the Company for the year
 ended March 31, 2013 was Rs. 397,062 crore, an increase of 10.8% on a
 Year-on-Year basis.
 
 The Company is one of India''s largest contributors to the national
 exchequer primarily by way of payment of taxes and duties to various
 government agencies. During the year, a total of RS. 28,950 crore ($
 5.3 billion) was paid in the form of various taxes and duties.
 
 The Company featured in the Fortune Global 500 list of the world''s
 largest corporations for the eighth consecutive year. The company was
 ranked 99th based on sales and 130th based on profits.
 
 Buy-Back of Equity Shares
 
 The Buy-back Offer announced by the Company on January 20, 2012 was
 closed on January 19, 2013.  Pursuant to the said Buy-back, the Company
 bought back and extinguished 4,62,46,280 equity shares of Rs. 10 each
 of an aggregate face value of Rs. 46,24,62,800 (which includes
 36,63,431 equity shares of Rs. 10 each bought back in FY 2011-12).
 Consequent to the Buy-back, the paid- up equity share capital of the
 Company as on March 31, 2013 (excluding allotment of shares made during
 the year pursuant to Employees Stock Option Scheme) stood at RS.
 3228,47,61,257.
 
 The Buy-back programme was the largest ever implemented to-date in the
 history of Indian capital markets and was EPS (Earnings Per Share)
 accretive for the Company. It is expected to supplement earnings growth
 from operations, for higher EPS, in the near future.
 
 Dividend
 
 Your Directors have recommended a dividend of Rs. 9.00 per Equity Share
 (last year Rs. 8.50 per Equity Share) for the financial year ended
 March 31, 2013, amounting to Rs. 3075 crore (inclusive of tax of Rs.
 447 crore and net of reversal of excess provision of previous year) one
 of the highest payout by any private sector domestic company.  The
 dividend will be paid to members whose names appear in the Register of
 Members as on May 13, 2013; in respect of shares held in dematerialised
 form, it will be paid to members whose names are furnished by National
 Securities Depository Limited and Central Depository Services (India)
 Limited, as beneficial owners as on that date.
 
 The dividend payout for the year under review has been formulated in
 accordance with shareholders'' aspirations and the Company''s policy to
 pay sustainable dividend linked to long term growth objectives of the
 Company to be met by internal cash accruals.
 
 Credit Rating
 
 The Company continues to have the highest domestic credit ratings of
 AAA from CRISIL (S&P subsidiary) and Fitch. Moody''s and S&P have
 reaffirmed investment grade ratings for international debt of the
 Company, as Baa2 positive outlook (local currency issuer rating) and
 BBB positive outlook respectively. The Company''s international rating
 from Moody''s and S&P is higher than the country''s sovereign rating.
 Strong credit ratings by leading international agencies reflect the
 Company''s financial discipline and prudence.
 
 Employees'' Stock Option Scheme
 
 The Employees'' Stock Compensation Committee, constituted in accordance
 with the Securities and Exchange Board of India (Employee Stock Option
 Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the SEBI
 Guidelines''), administers and monitors the Employees'' Stock Option
 Scheme of the Company.
 
 The applicable disclosures as stipulated under the SEBI Guidelines as
 at March 31, 2013 (cumulative position) are provided in Annexure I to
 this Report.
 
 The issuance of equity shares pursuant to exercise of Options does not
 affect the statement of profit and loss of the Company, as the exercise
 is made at the market price prevailing as on the date of the grant plus
 taxes as applicable.
 
 The Company has received a certificate from the Auditors of the Company
 that the Scheme has been implemented in accordance with the SEBI
 Guidelines and the resolution passed by the shareholders. The
 Certificate would be placed at the Annual General Meeting for
 inspection by members.
 
 Management''s Discussion and Analysis Report
 
 Management''s Discussion and Analysis Report for the year under review,
 as stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges in India, is presented in a separate section forming part of
 the Annual Report.
 
 Some of the Major events of the year include the following:
 
 RIL-BP Partnership
 
 In its second year of the partnership, Reliance Industries Limited
 (RIL) and BP combined their expertise in deepwater exploration and
 development and operations in India. Both the teams worked closely to
 understand the complex geology of the east-coast of India including
 KG-D6 block. The efforts are on to map out an exploration and
 development campaign that will efficiently target high quality
 prospects in deeper zones and optimise existing as well as future
 development plans.
 
 Smart Transformation At Reliance (STAR)
 
 The Company has embarked on one of the largest business transformation
 project STAR in order to make RIL FUTURE READY. It would help the
 Company bring end-to-end digital chain to free up resources, will also
 help enhance organisational entrepreneurship, create a world-class
 human resource framework to retain talent and fulfill mission of being
 an Employer of Choice.
 
 Shale Gas Business
 
 FY 2012-13 was a pivotal year for RIL''s North American Shale Gas
 business. It gained significant growth momentum and delivered superior
 performance despite adverse market conditions imposed by low gas prices
 and higher service costs. It was landmark year strategically, as
 Reliance completed carry obligations in the Carrizo and Pioneer JVs and
 transitioned into post-carry mode, allowing for improved governance
 rights and increased alignment on activity levels.
 
 Retail Business
 
 The retail business continued its growth journey during the year with
 new store launches as well as strong same store sales growth. The
 business accomplished a milestone by crossing a revenue of Rs. 10,000
 crore during the year.  The business grew by 42% to reach revenue of
 Rs. 10,800 crore as against Rs. 7,599 crore registered in the previous
 financial year. The business has achieved cash break- even with
 earnings before depreciation, finance cost and tax expense (EBDIT) of
 Rs. 78 crore. The milestone of crossing Rs. 10,000 crore revenue and
 reaching cash break- even at EBDIT level is a significant step in
 Reliance Retail''s journey towards attaining market leadership by
 democratizing access to all types of products and services across all
 segments for the discerning Indian customer.
 
 During the year under review, the realignment and consolidation of the
 various formats of retail businesses being carried on by the subsidiary
 companies of Reliance Retail Limited, was proposed, subject to
 necessary approvals of the High Court of Judicature at Bombay.
 
 The consolidation exercise and consequent reduction in the number of
 companies will help in enhancing operational flexibility, efficiencies
 and greater and optimal utilisation of resources and also lead to
 significant reduction in the multiplicity of legal and regulatory
 compliances.
 
 Infocomm Business
 
 Reliance Jio Infocomm Limited RJIL (formerly Infotel Broadband
 Services Limited) with Broadband Wireless Access (BWA) spectrum in all
 the 22 telecom circles of India, plans to provide reliable fast
 internet connectivity through the 20 MHz, contiguous, Pan-India BWA
 spectrum. In addition to connectivity, RJIL also plans to enable
 end-to-end solutions that address the entire value chain across various
 digital services in key domains of national interest such as education,
 healthcare, security, financial services, government-citizen interfaces
 and entertainment. RJIL aims to comprehensively address the requisite
 components of the customer need, thereby fundamentally enhancing the
 opportunity and experience of hundreds of millions of users in India.
 
 RJIL has finalized key agreements with its technology partners, service
 providers, infrastructure providers, application partners, device
 manufacturers and other strategic partners for the project. It aims to
 create a digital eco system which can be used to benefit the industry,
 the government and, above all, the people of this country.  RJIL has
 also completed the detailed planning for Pan India implementation of
 the infrastructure needed for the project.
 
 Reliance Haryana SEZ
 
 The Model Economic Township (MET) has been envisioned to be developed
 as an industrial infrastructure to support economic growth in a public
 private partnership framework with the Government of Haryana through
 HSIIDC Limited (a Government of Haryana company).
 
 The start-up phase of operationalization of MET in the district Jhajjar
 of Haryana has commenced during the year.
 
 Reliance Jamnagar Infrastructure Limited
 
 During the year under review, Reliance Jamnagar Infrastructure Limited,
 a wholly owned subsidiary which was acting as a co-developer in the
 Jamnagar SEZ got amalgamated with the Company.
 
 Expansion of Operations
 
 Your Company has commenced implementing significant expansion plans in
 the Petrochemical business and on completion over the next 3 to 4
 years, the overall volume is expected to increase by more than 60%.
 Your Company is also setting up the world''s largest petcoke
 gasification facility at Jamnagar to convert the lowest cost fossil
 fuels - coal and coke into gas.
 
 Consolidated Financial Statements
 
 In accordance with the Accounting Standard (AS) -21 on Consolidated
 Financial Statements read with AS-23 on Accounting for Investments in
 Associates and AS-27 on Financial Reporting of Interest in Joint
 Ventures, the audited Consolidated Financial Statements are provided in
 the Annual Report.
 
 Subsidiaries
 
 In accordance with the general circular issued by the Ministry of
 Corporate Affairs, Government of India, the Balance Sheet, Statement of
 Profit and Loss and other documents of the subsidiary companies are not
 being attached with the Balance Sheet of the Company. However the
 financial information of the subsidiary companies is disclosed in the
 Annual Report in compliance with the said circular. The Company will
 make available the Annual Accounts of the subsidiary companies and the
 related detailed information to any member of the Company who may be
 interested in obtaining the same.  The annual accounts of the
 subsidiary companies will also be kept open for inspection at the
 Registered Office of the Company and that of the respective subsidiary
 companies. The Consolidated Financial Statements presented by the
 Company include the financial results of its subsidiary companies.
 
 Details of major subsidiaries of the Company and their business
 operations during the year under review are covered in the Management''s
 Discussion and Analysis Report.
 
 Directors
 
 Shri Mahesh P. Modi, Dr. Dharam Vir Kapur, Dr. Raghunath A. Mashelkar
 and Shri Pawan Kumar Kapil, Directors, retire by rotation and being
 eligible, offer themselves for re-appointment at the ensuing Annual
 General Meeting.
 
 Directors'' Responsibility Statement
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Directors'' Responsibility Statement, it is
 hereby confirmed that:
 
 (i) in the preparation of the annual accounts for the year ended March
 31, 2013, the applicable accounting standards read with requirements
 set out under Schedule VI to the Companies Act, 1956, have been
 followed and there are no material departures from the same;
 
 (ii) the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as at March 31, 2013 and of the profit of the Company
 for the year ended on that date;
 
 (iii) the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 (iv) the Directors have prepared the annual accounts of the Company on
 a going concern'' basis.
 
 Auditors and Auditors'' Report
 
 M/s. Chaturvedi & Shah, Chartered Accountants, M/s. Deloitte Haskins &
 Sells, Chartered Accountants and M/s. Rajendra & Co., Chartered
 Accountants, Statutory Auditors of the Company, hold office until the
 conclusion of the ensuing Annual General Meeting and are eligible for
 re-appointment.
 
 The Company has received letters from all of them to the effect that
 their re-appointment, if made, would be within the prescribed limits
 under Section 224(1B) of the Companies Act, 1956 and that they are not
 disqualified for re-appointment within the meaning of Section 226 of
 the said Act.
 
 The Notes on Financial Statements referred to in the Auditors'' Report
 are self-explanatory and do not call for any further comments.
 
 Cost Auditors
 
 The Company has appointed the following cost auditors for conducting
 Cost Audit for the financial year 2012-13:
 
 (i) For the Textiles Business - M/s. Kiran J. Mehta & Co, Cost
 Accountants;
 
 (ii) For the Chemicals Business - M/s. Diwanji & Associates, Cost
 Accountants, M/s. K. G. Goyal & Associates, Cost Accountants, M/s. V J.
 Talati & Co., Cost Accountants, M/s. Bandyopadhyaya Bhaumik & Co., Cost
 Accountants, M/s Shome & Baneijee, Cost Accountants, M/s. Kiran J.
 Mehta & Co, Cost Accountants and M/s. Dilip M. Malkar & Co., Cost
 Accountants;
 
 (iii) For the Polyester Business - Shri Suresh D. Shenoy, Cost
 Accountant, M/s. V. Kumar & Associates, Cost Accountants;
 
 (iv) For Electricity Generation - M/s. Dilip M. Malkar & Co., Cost
 Accountants;
 
 (v) For Petroleum Business - M/s. V. J. Talati & Co., Cost Accountants;
 and
 
 (vi) For Oil & Gas Business - M/s Kiran J. Mehta & Co., Cost
 Accountants; Shri Suresh D. Shenoy, Cost Accountant; M/s Bandyopadhyaya
 Bhaumik & Co., Cost Accountants and M/s Shome & Banerjee, Cost
 Accountants.
 
 M/s Shome & Banerjee, Cost Accountants have been nominated as the Lead
 Cost Auditor of the Company.
 
 Secretarial Audit Report
 
 As a measure of good corporate governance practice, the Board of
 Directors of the Company appointed Dr. K.R.  Chandratre, Practicing
 Company Secretary, to conduct the Secretarial Audit. The Secretarial
 Audit Report for the financial year ended March 31, 2013, is provided
 in the Annual Report.
 
 The Secretarial Audit Report confirms that the Company has complied
 with all the applicable provisions of the Companies Act, 1956,
 Securities Contracts (Regulation) Act, 1956, Depositories Act, 1996,
 The Foreign Exchange Management Act, 1999 to the extent applicable to
 Overseas Direct Investment (ODI), Foreign Direct Investment (FDI) and
 External Commercial Borrowings (ECB), all the Regulations and
 Guidelines of SEBI as applicable to the Company, including The
 Securities and Exchange Board of India (Substantial Acquisition of
 Shares and Takeovers) Regulations, 2011, The Securities and Exchange
 Board of India (Prohibition of Insider Trading) Regulations, 1992, The
 Securities and Exchange Board of India (Employee Stock Option Scheme
 and Employee Stock Purchase Scheme) Guidelines, 1999, The Securities
 and Exchange Board of India (Issue and Listing of Debt Securities)
 Regulations, 2008, The Securities and Exchange Board of India (Buy Back
 of Securities) Regulations, 1998, Listing Agreements with the Stock
 Exchanges and the Memorandum and Articles of Association of the
 Company.
 
 Particulars of Employees
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are set out
 in the annexure to the Directors'' Report. Having regard to the
 provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report
 excluding the aforesaid information is being sent to all the members of
 the Company and others entitled thereto. Any member interested in
 obtaining such particulars may write to the Company Secretary at the
 Registered Office of the Company.
 
 Energy Conservation, Technology Absorption and Foreign Exchange
 Earnings and Outgo
 
 The particulars relating to energy conservation, technology absorption,
 foreign exchange earnings and outgo, as required to be disclosed under
 Section 217(1)(e) of the Companies Act, 1956 read with the Companies
 (Disclosure of Particulars in the Report of Board of Directors) Rules,
 1988 are provided in Annexure-II to this Report.
 
 Transfer of amounts to Investor Education and Protection Fund
 
 Pursuant to the provisions of Section 205A(5) and 205C of the Companies
 Act, 1956, relevant amounts which remained unpaid or unclaimed for a
 period of 7 years have been transferred by the Company to the Investor
 Education and Protection Fund.
 
 Pursuant to the provisions of Investor Education and Protection Fund
 (Uploading of information regarding unpaid and unclaimed amounts lying
 with companies) Rules, 2012, the Company has uploaded the details of
 unpaid and unclaimed amounts lying with the Company as on June 07, 2012
 (date of last Annual General Meeting) on the website of the Company
 (www.ril.com), as also on the Ministry of Corporate Affairs website.
 
 Corporate Governance
 
 The Company is committed to maintain the highest standards of Corporate
 Governance and adhere to the Corporate Governance requirements set out
 by SEBI. The Company has also implemented several best Corporate
 Governance practices as prevalent globally.
 
 The Report on Corporate Governance as stipulated under Clause 49 of the
 Listing Agreement forms part of the Annual Report.
 
 The requisite Certificate from the Auditors of the Company confirming
 compliance with the conditions of Corporate Governance as stipulated
 under the aforesaid Clause 49, is attached to this Report.
 
 Business Responsibility Report
 
 SEBI, vide its Circular CIR/CFD/DIL/8/2012 dated August 13, 2012,
 mandated the top 100 listed entities, based on market capitalisation at
 BSE and NSE, to include Business Responsibility Report as part of the
 Annual Report describing the initiatives taken by the companies from
 Environmental, Social and Governance perspective.
 
 Accordingly, the Business Responsibility Report is attached and forms
 part of the Annual Report.
 
 Acknowledgement
 
 Your Directors would like to express their appreciation for the
 assistance and co-operation received from the financial institutions,
 banks, Government authorities, customers, vendors and members during
 the year under review. Your Directors also wish to place on record
 their deep sense of appreciation for the committed services by the
 executives, staff and workers of the Company.
 
 For and on behalf of the Board of Directors
 
 Mukesh D. Ambani
 
 Chairman and Managing Director 
 
 April 16, 2013
Source : Dion Global Solutions Limited
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