Reliance Industries Limited: an Analysis

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This Project On Reliance Industries Limited is prepared by:

Name : Nikhil Javeri
Heriot Watt ID : H00114377
Subject : Financial Analysis
Lecturer : Mr. Milind

T. Y. BAF

Contents

Topic| Page Number|
Company Overview| 4|
Some Major Products & Brands| 5|
Balance Sheet| 6|
Profit & Loss Account| 7|
Cash Flow Statement| 8|
Liquidity Ratios| 9|
Cash Flow Ratios| 11|
Gearing Ratios| 12|
Management Performance Ratios| 14|
Investor Ratio| 16|
Company’s Growth Performance| 17|
Company’s Stock Performance| 20|
Financial and Non – Financial Parameters| 21|
Company’s Performance- Present & Future| 22|

Company Overview

The Reliance Group, founded by Dhirubhai Ambani in 1966 is India's largest private sector enterprise, with businesses in the energy and materials value chain.
Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products.

Reliance continues to cross newer & bigger milestones in its quest for what is known as "Growth is Life".
Reliance Industries Limited is listed on the Bombay Stock Exchange, National Stock Exchange and the London Stock Exchange.

Some of the Major Products & Brands

Balance Sheet as on 31st March, 2011

P/L account for the year ended 31st March, 2011

Cash Flow Statement

Graph showing net cash flow from operating, investing & financing activities

Liquidity Ratios
(All Figures in Rs. Crores)
Current assetsCurrent liabilities|
1) Current Ratio =

Over a period of 5 years, the current assets have increased by 220% whereas the current liabilities have increased by 155%. The higher rise in the level of current assets has been due to the high level of fixed deposits being made. However, a major concern building for the company has been that the amount of advances and debtors has also been increasing steadily. But, the positive aspect is that for every rupee of liability, the company has 1.46 rupee worth asset.

Current assets - inventoriesCurrent liabilities|
2) Quick Ratio =

The inventory level has remained constant over the last year since the focus of business was to make no investment of enhancing the stocks further due to many long-term investments made during the year. The ratio has now moves towards standardization. In the current scenario, the company can easily meet its immediate obligations promptly.

Cash Flow Ratios
Closing Stock x 100Working Capital|
1) Stock to Working Capital Ratio =

This ratio shows the amount of funds that are blocked in stocks. In 2007, there was a huge blockage seen in the amount of funds available for the firm since large amounts of funds were invested in stocks. There has however, been a sharp fall in this figure and now, the amount of working capital has significantly improved in respect to the amount of stocks.

Gearing Ratio
Total Debt x100% Ordinary share capital + reserves| 1) Debt Equity Ratio =
This is a very important tool for financial analysis. It shows the relation between external and internal equities of the company. The creditors and the...
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