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FINANCE PROJECT

Prof: Amogh GothoskarBy: Anurita Majumdar

Class: PGDPRCC

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Reliance Industries

Type Public

Traded as

BSE: 500325,  NSE: RELIANCE, LSE: RIGDBSE SENSEX ConstituentCNX Nifty Constituent

Industry Conglomerate

Predecessor(s)Reliance CommercialCorporation

Founded 1966

Founder(s) Dhirubhai Ambani

Headquarters Mumbai, Maharashtra, India

Area served Worldwide

Key peopleMukesh Ambani(Chairman and MD)

Products

Crude oil, natural gas, petrochemicals, petroleum, polyester, textiles, retail,

telecomRevenue US$ 73.10 billion (2013)

Operating

income 

US$ 7.14 billion (2013)

Net income US$ 3.86 billion (2013)

Total assets US$ 58.67 billion (2013)

Total equity US$ 31.66 billion (2013)

Employees 23,519 (2013)

Website RIL.com

 

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Timeline

The company was co-founded by Dhirubhai Ambani and his cousin ChampaklalDamani in 1960s as Reliance Commercial Corporation.

In 1965, the partnership was ended and Dhirubhai continued the polyester business of the firm

In 1975, company expanded its business into textiles, with "Vimal" becoming itsmajor brand in later years.

In 1985, the name of was changed from Reliance Textiles Industries Ltd thecompany to Reliance Industries Ltd.

In 1996, it became the first private sector company in India to be rated byinternational credit rating agencies.

In the year 1995-96, the company entered the telecom industry through a jointventure with NYNEX, USA and promoted Reliance Telecom Private Limited inIndia. 

In 1998-99, RIL introduced packaged LPG in 15 kg cylinders under the brandname Reliance Gas.

In 2001, Reliance Industries Ltd. and Reliance Petroleum Ltd. became India's twolargest companies in terms of all major financial parameters. 

In 2001-02, Reliance Petroleum was merged with Reliance Industries.

In 2002, Reliance announced India's biggest gas discovery (at the Krishna

Godavari basin). The in-place volume of natural gas was in excess of 7 trillioncubic feet, equivalent to about 1.2 billion barrels of crude oil. This was the firstever discovery by an Indian private sector company. 

In 2002-03, RIL purchased a majority stake in Indian Petrochemicals CorporationLtd. (IPCL), India's second largest petrochemicals company, from Government ofIndia. IPCL was later merged with RIL in 2008.

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In 2006, Reliance entered the organized retail market in India with the launch of itsretail store format under the brand name of 'Reliance Fresh'. By the end of 2008,Reliance retail had close to 600 stores across 57 cities in India

In 2010, Reliance entered Broadband services market with acquisition of InfotelBroadband Services Limited, which was the only successful bidder for pan-Indiafourth-generation (4G) spectrum auction held by Government of India.

In the same year, Reliance and BP announced a partnership in the oil and gas business. BP took a 30 per cent stake in 23 oil and gas production sharing contractsthat Reliance operates in India, including the KG-D6 block for $7.2 billion. 

Reliance also formed a 50:50 joint venture with BP for sourcing and marketing ofgas in India.

Shareholding

The number of shareholders in RIL is approx. 3 million. The promoter group,Ambani family, holds approx. 45.34% of the total shares whereas the remaining54.66% shares are held by public shareholders, including FII and corporate bodies.Life Insurance Corporation of India is the largest non-promoter investor in thecompany with 7.98% shareholding.

Major subsidiaries and associates

  Reliance Retail is the retail business wing of the Reliance Industries. InMarch 2013, it had 1466 stores in India. Many brands like Reliance Fresh, Reliance Footprint, Reliance Time Out, Reliance Digital, Reliance Wellness,Reliance Trends, Reliance AutoZone, Reliance Super, Reliance Mart,Reliance iStore, Reliance Home Kitchens, Reliance Market (Cash n Carry)and Reliance Jewel come under the Reliance Retail brand.

  Its annual revenue for the financial year 2012-13 was  10800 crore(US$1.7 billion) with an EBITDA of   78 crore (US$12 million).

  Reliance Life Sciences works around medical, plant and industrial biotechnology opportunities. It specializes in manufacturing, branding, and

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marketing Reliance Industries' products in bio-pharmaceuticals, pharmaceuticals, clinical research services, regenerative medicine, molecularmedicine, novel therapeutics, biofuels, plant biotechnology, and industrial

 biotechnology sectors .  Reliance Institute of Life Sciences (RILS), established by Dhirubhai

Ambani Foundation, is an institution offering higher education in variousfields of  life sciences and related technologies.

  Reliance Logistics is a single-window company selling transportation,distribution, warehousing, logistics, and supply chain-related products,supported by in-house telematics and telemetry solutions. It provideslogistics services to Reliance group companies and outsiders.

  Reliance Clinical Research Services (RCRS), a contract researchorganization (CRO) and wholly owned subsidiary of Reliance Life Sciences,specializes in the clinical research services industry. Its clients are primarily

 pharmaceutical, biotechnology and medical device companies.

  Reliance Solar, the solar energy subsidiary of Reliance, was established to produce and retail solar energy systems primarily to remote and rural areas.It offers a range of products based on solar energy: solar lanterns, homelighting systems, street lighting systems, water purification systems,refrigeration systems and solar air conditioners.

  Relicord is a cord blood banking service owned by Reliance Life Sciences.It was established in 2002. It has been inspected and accredited by AABB, 

and also has been accorded a license by Food and Drug Administration(FDA), Government of India.

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  Reliance Jio Infocomm (RJIL), previously known as Infotel Broadband, isa broadband service provider which gained 4G licenses for operating acrossIndia. Now it is wholly owned by RIL for   4800 crore (US$730 million).

  Reliance Industrial Infrastructure Limited (RIIL) is an associatecompany of RIL. RIL holds 45.43% of total shares of RIIL. It was fortransporting petroleum products.

RIIL is mainly engaged in the business of setting up and operating industrialinfrastructure. The company is also engaged in related activities involving

leasing and providing services connected with computer software and data processing.

  incorporated in September 1988 as Chembur Patalganga Pipelines Limited,with the main objective being to build and operate cross-country pipelines

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Balance sheet analysis

SHARE CAPITAL

The authorized share capital of a company is the maximum amount of share capitalthat the company is authorized by its constitutional documents to issue toshareholders which in this case is 6000 (equity shares + preference shares i.e. 5000+ 1000)

Paid up capital is the total amount of shareholder capital that has been paid in full by shareholders.Paid-up capital is essentially the portion of authorized stock that the company hasissued and received payment for which has dropped from 3271(march 2012) to

3229(march2013).

RESERVE AND SURPLUS

ASSET REVALUATION RESERVE: it is an accounting concept and represents a

reassessment of the value of a capital asset as at a particular date. Reserve

account that records the surplus created when assets are revalued. Revaluationreserve has dropped from 5467 to 3127

CAPITAL RESERVE: A reserve created if a company purchases capital forlong-term or large scale projects. The capital reserve has been 291cr for 2012 aswell as 2013. 

CAPITAL REDEMTION RESERVE: An account specifically dedicated to the setting

aside of  its own shares in circumstances that result in a reduction of share capital.

It is a reserve that cannot be distributed to the shareholders and thus ensures the

maintenance of the capital base of the company and protects the creditors’

buffer. 

There was no such reserve in the year 2012 and a reserve has been created asdeclared in March 2013 for 4cr.

SECURITIES PREMIUM RESERVE: Excess amount received by a firm overthe par value of its shares. This amount forms a part of the non-distributablereserves of the firm which usually can be used only for purposes specified under

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current unsecured debt has significantly risen from 6756 cr in 2012 to 13700 cr in

2013.

DEFFERRED TAX LIABILITY: A tax liability that a company owes and does

not pay at that current point, although it will be responsible for paying it at somepoint in the future. In this case, the deferred tax liability has slightly risen to

12193 cr in 2013 from 12122cr in 2012.

CURRENT L IABIL I TIES

SHORT TERM BORROWINGS: The secured short term borrowing has droppedfrom 757cr in 2012 to 433cr in 2013. Whereas the unsecured short term loan hasrisen from 9836 cr in 2012 to 11078cr in 2013.

Thus the total short term borrowings show a slight rise from 10593 cr in 2012 to11511cr in 2013

TRADE PAYABLES: Trade payables are also known as accounts payable and

refers to money owed to creditors, lenders, vendors or suppliers for products or

services rendered. The trade payables are 45787cr in 2013 as compared to40324cr in 2012 showing a rise.

OTHER CURRENT LIABILITIES: A balance sheet entry used by companies to group

together current liabilities that are not assigned to common liabilities such as

debt obligations or accounts payable. The total other current liabilities have

shown a rise of 7927cr from being 13713cr in 2012 to 21640cr in 2013.

SHORT TERM PROVISIONS: Provisions made for short periods, usually

3months. Short term provisions are 4348 cr in 2013 and were 4258 cr in 2012.

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ASSESTS:

NON CURRENT ASSESTS

FIXED ASSESTS(tangible): A long-term tangible piece of property that a firmowns and uses in the production of its income and is not expected to be consumedor converted into cash any sooner than at least one year's time. Fixed assets (ownedand leased) are 82962cr in 2013 as compared to 88001cr in 2012.

INTANGIBLE ASSETS: In accounting, any asset that cannot be seen or

touched. Intangible assets include things like patents and brand recognition,

which add value to a company, but are difficult to price. The value of the total

intangible assets has slightly risen from 25722 cr in 2012 to 26786cr in 2013.

CAPITAL WORK IN PROGRESS: Capital work-in-progress comprisesoutstanding advances paid to acquire fixed assets and the cost of fixed assets that

are not yet ready for their intended use at the balance sheet date. This account

shows a significant raise from 3695cr in 2012 to 13525cr in 2013.

INTANGIBLE ASSESTS UNDER DEVELOPMENT: this is accounted for4059cr in 2012 and has increased to 5591cr in 2013

NON CURRENT INVESTMENTS: noncurrent investment is the investmentwhich is for long period and not releasable for the current period .The company’s

non current investments are in equity shares of associate companies, preferenceshares of associate companies, equity share of subsidiary companies, preferenceshares of subsidiary companies, debentures of subsidiary companies, governmentsecurities, fixed maturity plans. The sum total of these investments account to24143cr in 2013.

LONG TERM LOANS AND ADVANCES: A type of loan that has an extended

time period for repayment usually lasting between three and 30 years. Car loans

and home mortgages are examples of long-term loans. The balance sheet shows a

significant rise in the long term loans and advances from being 14340cr in 2012 to

21528cr in 2013.

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CURRENT ASSESTS

CURRENT INVESTMENTS: An account in the current assets section of a company's

balance sheet. This account contains any investments that a company has made

that will expire within one year. For the most part, these accounts contain stocks

and bonds that can be liquidated fairly quickly.The company’s current

investments include investments in government securities, debentures and

bonds, fixed maturity plans, mutual funds, certificate of deposit with scheduled

banks. The total current investments sum up to be 28366cr in 2013 which is

slightly more than 27029cr in 2012.

INVENTORIES: The raw materials, work-in-process goods and completely

finished goods that are considered to be the portion of a business's assets that

are ready or will be ready for sale. The amount of total inventories (raw materials

as well as finished goods) is 42729cr which is more than the previous year (2012)

which was 35955cr.

TRADE RECEIVABLES: Money owed by customers (individuals or corporations) to

another entity in exchange for goods or services that have been delivered or

used, but not yet paid for. There is a drop in the amount of the trade receivables

from being 18424cr in 2012 to 11880cr in the year 2013.

CASH AND BANK BALANCES: bank and cash balance bank balance: - A bank

balance is that amount which is actually deposited in any of the bank. Or the

amount which has been credited in your bank account. Cash balance: - It is an

amount which is there in your hand. i.e., it is otherwise called as cash in hand. Or

else we can say that the hot cash which is there with you right now is called as a

cash balance. The cash and bank balances total has risen from 39598cr in 2012 to

49547cr in 2013.

SHORT TERM LOANS AND ADVANCES: In general, a loan with a maturity

period of one to five years. The short term loans and advances have reduces from

11089cr in 2012 to 10974cr in 2013.

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OTHER CURRENT ASSESTS: The other current assets (i.e. the interestincurred on investments) have increased from being 249cr in 2012 to 480cr in2013.

Hence the total assets (current and noncurrent) account to be 318511crores asopposed to 295140cr in the year 2012 indicating growth.

CONCLUSION

Current Ratio = Total Current Assets/Total Current Liabilities= 1.72  Current assets i.e. 1, 43,976 crores exceeds the current liabilities i.e.

83286crores exhibiting financial strength. It means the business hasenough current assets to meet the payment schedule of currentliabilities with a margin of safety

Quick Ratio = (Current Assets - Inventory)/Current Liabilities =1.21

  Quick ratios between 50 and 1 are considered satisfactory. Accordingly, the quick ratio is good which says the company’sliquidity is good

Working Capital = Total Current Assets - Total Current Liabilities=60,690

 These are all ratios to check the company’s liquidity. 

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LIVE MARKET

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ANALYSIS

Stock price: rs.878.70

Face value: rs10

Industry: integrated oil and gas.

STOCK TRADING:

WTD AVG PRICE:

A trading benchmark used especially in pension plans. VWAP is calculated byadding up the dollars traded for every transaction (price multiplied by number ofshares traded) and then dividing by the total shares traded for the day.

The theory is that if the price of a buy trade is lower than the VWAP, it is a good

trade. The opposite is true if the price is higher than the VWAP.

In this case the price is Rs. 877.60

Turnover: A measure of stock liquidity calculated by dividing the total number of

shares traded over a period by the average number of shares outstanding for the

period. The higher the share turnover, the more liquid the share of the company.

Here,the share turnover is 8.32. 

TTQ – Total Traded Quantity (TTQ) is the sum of quantity traded on a given date

which includes both purchase and sale.

The TTQ is 0.95 lakhs.

Wtd. Avg Price: Sum of value of trades divided by the volume at a given point of

time

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The wt avg price is 3.03 lakhs.

CIRCUIT LIMITS: upper limit (circuit) is the maximum price at which a particular

share can quote for buying / selling. Lower limit (circuit) is the minimum price at

which a particular share can quote for buying / selling.

Here, the upper circuit limit is Rs.964.35 and the lower circuit limit is Rs.789.05

MARKET CAP: Market capitalization is calculated by multiplying a company's

shares outstanding by the current market price of one share. The investment

community uses this figure to determine a company's size, as opposed to sales or

total asset figures.

The market cap for RIL is 28426crores.

MARKET CAP F F: Many different types of investors hold the shares of a company!

The Govt. may hold some of the shares. Some of the shares may be held by the

“founders” or “directors” of the company. Some of the shares may be held by the

FDI’s etc. etc! 

Now, only the “open market” shares that are free for trading by anyone are called

the “free-float” shares.

The free float shared for RIL is worth 156343crores.

Ex DATE: The date on or after which a security is traded without a previously

declared dividend or distribution. This is the date on which the seller, and not the

buyer, of a stock will be entitled to a recently announced dividend.

Here, the Ex date is May10, 2013.

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 ARTICLES

Reliance Industries topples ONGC to become

top-ranked Indian energy firmPTI Oct 29, 2013, 08.18PM IST

Tags:(Reliance Industries topples…) 

SINGAPORE: Reliance Industries has toppled state-owned Oil and Natural Gas Corp (ONGC)to become the top Indian firm in a global ranking of energy companies.

Billionaire Mukesh Ambani-led RIL improved eight positions to grab the 19th position on thePlatts Top 250 Global Energy Company Rankings for 2013.

ONGC held on its 22nd ranking, the position it had in 2012, while RIL improved from last time's27th rank.

This year's list is topped by Exxon Mobil Corp, with Chevron Corp in second place.

The US giants are followed by Royal Dutch Shell and Russia's Gazprom, Statoil of Norway,Total of  France and Lukoil of Russia. Chinese firm PetroChina makes an entry at number 8,while UK's BP Plc is ranked number 11.

The Platts Top 250 Global Energy Company Rankings, now in its 12th year, is based on datacompiled and maintained by S&P Capital IQ, which, like Platts, is a part of The McGraw-HillCompanies.

The 2013 rankings reflect fiscal 2012 financial performance in four key areas: asset value,revenue, profit and return on invested capital (ROIC).

Coal India improved its ranking from 48 to 43 while power utility NTPC went to 49th rank from62 in 2012.

Oil refining and marketing company Indian Oil Corp improved two positions to rank at number80 while gas utility GAIL India moved up four notches to 105. Cairn India, which held the 121st position, moved up to 109 this year.

Bharat Petroleum Corp leaped to 119th position from 178 in the 2012 listing. Other Indian firmsfeaturing in the 250 listing include Power Grid Corp (ranked 139), Reliance Infrastructure (163),Hindustan Petroleum Corp (177), NHPC (197) and Essar Energy (229th position).

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Veerappa Moily approves taking away 5 gas

discoveries from Reliance IndustriesET Bureau Oct 29, 2013, 08.44AM IST

Tags:(Moily in the October 9 order,)

 NEW DELHI: The oil ministry has decided to ask  Reliance Industries to immediately surrenderfive discoveries containing natural gas worth $6.8 billion in the controversial KG-D 6 block andoffer the fields to bidders in a fresh auction on a priority basis, giving another blow to MukeshAmbani's company. Oil Minister  Veerappa Moily wants RIL to relinquish the discoveries because it could not submit field-development plans on time.

The minister, however, allowed the company to retain three other fields, striking a middle pathafter the directorate general of hydrocarbons recommended that all eight fields should berelinquished. "According to the directive of the minister, 6,198.88 sq km area out of total 7,645area, including five discoveries, stands relinquished. The fate of the three other discoveries will be decided by the cabinet as per the minister's recommendations," an oil ministry official toldET. Reliance faced stern treatment from the oil ministry during Jaipal Reddy's tenure, but thingsseemed to improve after Moily became minister and obtained cabinet's approval for a new gas price formula, which doubled gas rates to an estimated $8.4 per unit from April.

However, soon after the cabinet approval, the oil ministry prepared a new note for the cabinet

seeking to disallow the new price for RIL's existing fields because the DGH blamed the companyfor the steep fall in output. RIL spokesmen declined comments, but sources close to the companysaid that RIL would contest the decision. Sources also said that if the fields are auctioned again,the new bidder would have to spend heavily in creating new infrastructure. The DGH hasestimated that the value of the gas contained in these fields is $6.76 billion at the new gas priceof $8.4. In a strongly worded note, Moily said he was taking a final view after "carefully"examining the matter and giving an opportunity to RIL and its partner BP "in the interest of principle of natural justice and in order to arrive at a balanced approach”. 

"I agree with the proposal that the contractor should be asked to relinquish corresponding areas pertaining to five discoveries with immediate effect," he said in the note, government sources

said. "Considering the estimated reserve of 805 bcf (billion cubic feet) in these five discoveries,the relinquished area should be offered for competitive bidding on priority," he said. Moily,however, allowed RIL to retain three other fields containing gas worth $2.9 billion at the new price. The minister accepted Reliance's argument that a particular type of appraisal was initiallynot mandatory.

"In the particular case also, the DGH did not insist for DST (drill-stem test) in the past whichcreated an impression that even the DGH does not consider DST as a mandatory requirement,"

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he observed. "The contractor during the course of presentation also very forcefully argued thatDST is not a singular mandatory test to establish surface flow as per the international practicesand regulations. This fact could not be contradicted by the ministry /DGH officials," he said.

Referring to discussions held when Jaipal Reddy was the minister, Moily said: "The matter was

discussed by my predecessor in the meeting held on July 13, 2012 wherein it was advised to thecontractor to undertake DST and the contractor expressed its willingness to do so in two weeks,"he said. The minister said that in the case of three discoveries, there was a delay on part of DGHin reviewing the declaration of commerciality (DoC) and taking a "categorical stand" that thecontractor must conduct DST.

Airtel, RIL only Indian companies on

Goldman’s most

-favoured list of Asian creditBloomberg Oct 25, 2013, 04.00AM IST

Tags:(The premium investors pay…) 

Bonds of companies controlled by Sunil Mittal and Mukesh Ambani, added in August toGoldman Sachs Group's most-favoured list, helped investors to the biggest gains in 20 monthsfor India's dollar debt. Notes of the nation's issuers returned 5.6% since August 30, according toJPMorgan Chase's Asian Credit Index, poised for the best performance since a 7.9% advance inthe first two months of 2012.

The premium investors pay over Treasuries has slid 57 basis points in the period, the biggestdecline after Indonesia and Pakistan among 13 Asian markets. Investors are signalling their faithin Indian borrowers after the central bank stemmed a rout in the rupee and companies in the benchmark S&P BSE Sensex surpassed or matched profit forecasts.

Indian debt also rallied on bets the US Federal Reserve will delay tapering its stimulus that has buoyed emerging-market assets. "There is some positivity after the earnings," said Philipp Good,who manages $800 million, including Indian debt, in Zurich at Fisch Asset Management.

"Investors are probably of the opinion that impending risks to India and emerging markets havereceded, therefore the bonds become more appealing in the short term." Mittal's Bharti Airtel andAmbani's Reliance Industries are the only Indian companies on Goldman's "most-favoured" listof Asian credit, an October 16 report by the US bank shows.

The lender added them on August 26 amid a sell off in emerging market debt triggered byspeculation the Fed will cut its bond purchases. Bharti's 5.125% notes maturing March 2023have returned 6.5% this month, data compiled by Bloomberg show, the most among 67 Indian

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 bonds included in JPMorgan's Asian Credit Index. The yield fell to 5.917% on Wednesday froma record 8.04% on August 22.

Reliance's 5.4% bonds due February 2022 gained 4.3% in October, pushing the yield to 4.93%from an unprecedented 6.088% on August 22. Net income at nine BSE 30 members, including

Reliance, that have published results for the quarter through September 30, met or beat forecasts,data compiled by Bloomberg show. About half of them trailed forecasts in April-June quarter.

Reliance Industries, BP promise to invest $10

bn more in oil and gas sector

ET Bureau Oct 19, 2013, 03.16AM IST

Tags:(BP CEO Bob Dudley and Reliance…) 

 NEW DELHI: BP CEO Bob Dudley and Reliance Industries Chairman Mukesh Ambani promised fresh investment of up to $10 billion in oil and gas but sought the government's supportin tackling regulatory issues and allowing the companies to sell natural gas at market-linked prices.

The two business leaders met Oil Minister Veerappa Moily, Planning Commission's DeputyChairman Montek Singh Ahluwalia and Law Minister Kapil Sibal. Dudley who is on his fourthvisit to India, also had a separate meeting with Finance Minister P Chidambaram, in which

Ambani was not present. The finance ministry has been at the forefront of moves to review theCabinet's decision to substantially raise natural gas prices.

After meeting ministers, Dudley said India had an enormous need for all forms of energy - oil,gas, coal and renewable. "BP is hoping to play a significant role in that ... I want to express BP'scommitment to India. We have invested a great deal in India. We are the largest foreign investorhere across many forms. I want to let the PM know about the progress that we are making inupstream and downstream in India," he said, according to an ET Now report. Dudley alsoexpressed some concern about regulatory issues but was not directly critical. "We are committedto invest in India. We have requested the government to pave the way," he told reporters at the

Planning Commission.

Dudley and Ambani were also expected to meet the prime minister but the meeting could not bescheduled till late in the evening. On Saturday, they are scheduled to share the dias with BJPleader Narendra Modi at the convocation of a university in Gandhinagar, where Ambani is thechairman of the board of governors.

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Reliance and BP are concerned about the oil ministry's move to deny higher prices for theexisting fields in the KG-D6 block until it makes up for the shortfall in production. They are alsofacing regular criticism from CPI leader Gurudas Dasgupta, who has asked the prime minister totake action against Reliance and alleged that Moily was bending backwards to help the company.In his latest communication, Dasgupta has demanded termination of the contract for KG-D6 and

alleged that Moily was shifting out honest and independent bureaucrats from the ministry. Moilysaid he was dealing with various issues in accordance with rules and the contract. "There aresome people who are creating fear among people so that nobody will invest in this country, but Iwill not act by mere perception," Moily told reporters after the meeting with Ambani andDudley.

For Reliance Industries, the rupee propped

up profitsET Bureau Oct 16, 2013,(The fall in refining margins…) 

Reliance Industries (RIL), India's largest company, saw its earnings before interest and taxes jump 15 per cent from the first quarter to the second, though net profits grew at a far moremodest 2.6 per cent. Part of the reason for this was a sharp, 8 per cent-plus fall in its refiningmargins, down from $8.40 per barrel in Q1 to $7.70 per barrel in Q2. This fall happened becausethe Asian demand —  and, therefore, pricing —  of lighter fuels like diesel and petrol was under pressure, possibly because most major emerging economies are growing slower than they were

 before.

For RIL, which exports a large part of its refinery output, the fall in refining margins could havehad a deeper impact on its bottom line had the rupee not depreciated sharply in this period fromRs 58 to a dollar to Rs 62 per dollar. Refining volumes also grew, with its refineries operating at114 per cent capacity this quarter, up from 110 per cent in the previous one. The increase involumes has helped protect margins in the refining segment as well.

RIL is India's largest single producer of petrochemicals and, expectedly, these played a majorrole in propping up its bottom line. Petrochemicals earnings grew 10 per cent to Rs 2,500 crore.

Earnings have improved in polymers and fibre intermediates. With growth in India picking upmomentum, this segment will do better over the following quarters.

For RIL, refining and selling oil and making petrochemicals are not new. Investors understandthese businesses and value them realistically. These are steady, bread-and-butter earners for thecompany, especially the petrochemicals business, where RIL is a monopolist or near-monopolistfor several products. But the main uncertainty about the stock lies in the upstream, explorationand production segment. RIL's production of gas fell 8 per cent quarter-on-quarter and there was

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no growth in oil output from the KG D6 basin. This fall in output from its fields is alarming forinvestors. They are also spooked by the regulatory tangles that RIL has got into with thegovernment.

In sum, it is their supposed core competence, of managing the system that is not up to scratch.

Recommendations:

On the basis of my study and understanding of the balance sheet of RIL, the

company is doing well. All the ratios suggest there is enough funds with the

company to pay off the liabilities and have a safe margin in hand for future

operations. Even the shares have shown significant growth. According to a lot of

reviews, it is a very aggressive stock and the Economic Times had recommended

it. So my personal understanding says that we can add this share to our

investment portfolio.

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