CHANDRAGUPT INSTITUTE OF MANAGEMENT,

PATNA

ANALYSIS OF RELIANCE INDUSTRIES LTD.

Guided by: Prof.Kalyan Agrawal Submitted by: Pragati Priya

Roll no. 11035

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 CONTENTS

S. No. TITLE PAGE No.

1. INTRODUCTION 03

2. COMPANY PROFILE 04

3. OBJECTIVE 05

4. METHODOLOGY 05

5. ANALYSIS 06-09

6. REFERENCE 10

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 INTRODUCTION

The Reliance Group, founded by Dhirubhai H. Ambani, is India's largest private sector enterprise,
with businesses in the energy and materials value chain. The flagship company, Reliance Industries
Limited, is a Fortune Global 500 company and is the largest private sector company in India.
Dhirubhai Ambani founded Reliance as a textile company and led its evolution as a global leader in
the materials and energy value chain businesses. It was in 1957 when he returned to India after a stint
with A.Besse& Co., Aden he started yarn trading business from a small 500 sq.ft. Office in Masjid
Bunder, Mumbai. He set up his brand new mill in Naroda, Gujarat. In 1996 Reliance went on to
become the biggest textile brand ‘Only Vimal’. In 1977 the Reliance Textile Industries came with an
IPO which was oversubscribed seven times.
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.
Starting as a small textile company, Reliance has in its journey crossed several milestones to become
a Fortune 500 company in less than 3 decades.
Reliance Industries Limited operates world–class manufacturing facilities across the country at
Allahabad, Barabanki, Dahej, Dhenkanal, Hazira, Hoshiarpur, Jamnagar, Kurkumbh, Nagothane,
Nagpur, Naroda, Patalganga, Silvassa and Vadodara.

The company works under different business segments:

 Exploration and Production

 Petroleum Refining and Marketing
 Petrochemicals
 Textiles
 Retail
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 Telecom (JIO)

TypePublic

Industry Conglomerate

Founded 1966; 51 years ago

Founder Dhirubhai Ambani

Headquarters Mumbai, Maharashtra, India

Area served Worldwide

Key people Mukesh Ambani(Chairman and MD)

Products Petroleum, Natural gas, Petrochemicals, Textiles

Telecommunication,Retail

Revenue ₹3,301 billion (US$51 billion) (2017)

Operating income ₹555 billion (US$8.6 billion) (2017)

Profit ₹299 billion (US$4.6 billion) (2017)

Total assets ₹7,068 billion (US$110 billion) (2017)

Number of employees 250,000 (2017)

Website www.ril.com

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 OBJECTIVE

1. To analyze the current ratio of Reliance industries to find out the company’s ability to pay off
its short term and long term obligations.
2. To find out the current scenario and growth trend line of industry in India.
3. To find out the internal and external factors that can affect organization’s growth in future.

METHODOLOGY

 Finding Secondary Data from Prowess.

 Reading expert’s opinion on current trends and opportunities in telecom industry.
 Analyzing the data of annual report of Reliance industries ltd.
 Viewing videos online to see how steel industry works.
 Analyzing the financial data using MS Excel.
 Crafting my research findings using MS-Word.

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 ANALYSIS

Current Ratio Analysis

The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-
term obligations. Current Ratio= Current Assets (CA) / Current Liabilities (CL)

1800000

1600000

1400000

1200000

1000000
Current liabilities & provisions
800000
Current assets and loans &
600000 advances

400000

200000

Current ratio
2.5

1.5

1 Current ratio

0.5

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According to the data given above, Reliance industries ltd. current ratio in the previous year was
more than 1 but in year 2016 liabilities were more and reliance current ratio started decreasing and it
came below the mark i.e. 1.In my opinion JIO was the major cause of gaining so much of liabilities
for the company and its current ratio started declining from 2016 onwards. Liabilities are increasing
rapidly for the company. A ratio under 1 indicates that a company’s liabilities are greater than its
assets and suggests that the company in question would be unable to pay off its obligations if they
came due at that point.

Suggestion:Reliance industries ltd. should pay off its current liabilities quickly. Early payments to
creditors can save interest cost and earn discount which will have a direct impact on the profits of
the firm.

Net Profit Growth

The netprofit of a business is the difference between its gross, or total, profit and its total expenses,
including overhead, interest payments and taxes. Thenet profit margin is the amount of profit a
business receives for each unit of sales.

Net Profit = Total income – Total expenses

4500000
4000000
3500000
3000000
2500000
2000000 Total income

1500000 Total expenses

1000000
500000
0

Year Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17

Profit 1,95,06 1,53,09 1,62,35 2,02,86 2,00,40 2,10,03 2,19,84 2,27,36 2,73,84 3,14,25
after 3.90 3.20 6.70 0.00 0.00 0.00 0.00 0.00 0.00 0.00
tax

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 Profit after tax
350,000.00

300,000.00

250,000.00

200,000.00

150,000.00

100,000.00

50,000.00

0.00
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

We can observe here that the organization’s net profit is increasing continuously except 2009 and in
2010.Elephants can dance, going by Reliance Industries’ (RIL) performance in FY17. After five
years, the country’s largest private sector company by revenue has reported double-digit growth in
earnings.Revenue from operations rose to Rs3.3 lakh crore in FY17 from Rs2.93 lakh crore in the
previous year, up 12.5%. Operating profit came in at Rs55, 529 crore, higher by 12.4%.So we need
to keep this in mind that in 2008, RIL posted Rs15, 000 crore net profit and this year it will be
posting Rs30, 000 crore net profit. Over the past nine years, profit has doubled but the stock was at
Rs3, 200 in 2008, adjusted for bonus it was Rs1, 600. And today, after nine years, the stock is at
about 11-12 per cent below the price of 2008 despite doubling the net profit.The business delivered
strong PBDIT of Rs333 crore in Q3 of FY17 compared with Rs237 crore reported for the
corresponding period of the previous year. The increase in revenue was primarily on account of an
increase in prices of refining and petrochemical products, led by a 13 per cent increase in Brent crude
prices. The turnover was boosted by robust growth in retail business.

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 SWOT ANALYSIS
STRENGTH:

 Strong market position in various categories

 Brand Name and financial position allow RIL to expand

 The operational advantage in refining

 Expansion in the retail industry

 Reliance Jio

WEAKNESS:

 Production declining in exploratory blocks

 Recent divesting and relinquishing activities affects growth

 Legal proceedings and litigations

OPPORTUNITIES:

 New Plants

 Investing in attractive international oil and gas destinations

 CBM as unconventional natural gas

 New offers in Reliance Jio

THREAT:

 Intense competition in all sectors

 In Retail

 Reliance Jio free offers ending

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 REFERENCES

1. https://en.wikipedia.org/wiki/Reliance_Industries

2. http://profit.ndtv.com/stock/reliance-industries-ltd_reliance/financials-historical-ratio

3. https://prowessiq.cmie.com/

4. https://craytheon.com/financials/fundamental_stock_analysis_cagr_annual_growth_rate_tren
d_chart.php?company=RELIANCE

5. http://economictimes.indiatimes.com/markets/expert-view/big-is-getting-bigger-rich-richer-
the-small-marginalised-n-jayakumar-prime-securities/articleshow/60033037.cms

6. http://economictimes.indiatimes.com/markets/stocks/news/another-billion-dollar-quarter-for-
ril-10-takeaways/articleshow/56599595.cms

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