Financial Analysis of Reliance Group of Company: a Comparative Study

Topics: Reliance Anil Dhirubhai Ambani Group, Reliance Communications, Companies based in Mumbai Pages: 9 (2820 words) Published: August 13, 2013

In the competitive era, Reliance Group has ranks among India’s top three private sectors business houses in terms of net worth. They indirectly motivate the private sectors business by offering a healthy competition in the world. The objective of this paper is to study the comparative trend analysis in Reliance group of company by Liquidity ratios and Profitability ratios. The secondary data is used in this study. The sample unit of this study was Reliance Capital, Reliance Communication and Reliance infrastructure. The data from 2007 to 2011 of Reliance group of company was under taken for the study. Findings of this study indicates that shareholders are not ready to invest their investment in Reliance group of company due to the financial crisis and others internal and external factors. Keywords: Trend analysis, Liquidity Ratios, Profitability Ratios, Financial crisis

Analysis of company provides an interesting outlook on a company and its success in comparison to its industry competitors. While these types of analysis provide a quantitative methodology of analyzing an organization, it is important to remember that qualitative factors also play a role in understanding the organization’s well being. Assessing both the quantitative and qualitative factors will provide the tools necessary to conduct an unbiased financial analysis of an organization. Liquidity ratios measure a business' ability to meet the payment obligations by comparing the cash and near cash with the payment obligations. If the coverage of the latter by the former is insufficient, it indicates that the business might face difficulties in meeting its immediate financial obligations. This can, in turn, affect the company's business operations and profitability. The Liquidity versus Profitability Principle: There is a trade-off between liquidity and profitability; gaining more of one ordinarily means giving up some of the others. Ratios are highly important profit tools in financial analysis that help financial analysts implement plans that improve profitability, liquidity, financial stability and management efficiency for the business.

Reliance Group, an offshoot of the Group founded by Shri Dhirubhai H Ambani (1932-2002), ranks among India’s top three private sectors business houses in terms of net worth. The group has business interests that range from telecommunications (Reliance Communications Limited) to financial services (Reliance Capital Ltd) and the generation and distribution of power (Reliance Infrastructure Limited). Across different companies, the group has a customer base of over 100 million, the largest in India, and a shareholder base of over 12 million, among the largest in the world. Through its products and services, the Reliance Group touches the life of 1 in 10 Indians every single day. It has a business presence that extends to over 20000 towns and 4.5 lakhs villages in India, and 5 continents across the world. It has established a pan-India, high-capacity, integrated (wireless and wire line), convergent (voice, data and video) digital network, to offer services spanning the entire infocomm value chain. The group has a market capitalization of Rs 138,126 cr, net assets in excess of Rs 174,469 cr, and net worth to the tune of Rs 83,924 cr. Reliance Anil Dhirubhai Ambani Group has a customer base of over 230 million, the largest in India, and a shareholder base of over 11 million, among the largest in the world. The Reliance Group has a business presence that is spread over 4,500 towns and 300,000 villages in India, and 5 continents across the world. The RELIANCE Group of companies had business operations (more than 120 companies and subsidiaries) in six defined sectors- capital, communication, infrastructure, health, entertainment and power. RCOM secured a place among the top sixteen mobile...

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