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Relaince Industries Annual Report 2009-2010 | Relaince Industries Limited Annual Report at Bindashyderabad.com

RELIANCE INDUSTRIES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

Dear Shareholders,

Your Directors are pleased to present the 36th Annual Report and the
audited accounts for the financial year ended March 31, 2010.

Financial Results

The financial performance of the Company, for the year ended March 31, 2010
is summarised below:

2009-2010
Rs. crore $ Mn*
Profit before Depreciation,
Interest & Tax 33,041.18 7,359
Less: Interest 1,997.21 445
Depreciation 13,477.01
Less: Transfer from
Revaluation 2,980.48
Reserve 10,496.53 2,338
Profit before Tax 20,547.44 4,576
Less: Provision for
Current Taxation 3,111.77 693
Provision for
Fringe Benefit Tax - -
Provision for
Deferred Tax 1,200.00 267
Profit after Tax 16,235.67 3,616
Add: Balance in Profit
and Loss Account 5,384.19 1,199

Amount Available
for Appropriation 21,619.86 4,815

Appropriations:

General Reserve 14,000.00 3,118
Debenture Redemption Reserve 189.50 42
Dividend on Equity Shares 2,084.67 464
Tax on dividend 346.24 77
Balance carried to Balance Sheet 4,999.45 1,114
21,619.86 4,815

2008-2009
Rs. crore $ Mn*
Profit before Depreciation,
Interest & Tax 25,373.75 5,003
Less: Interest 1,745.23 344
Depreciation 7,182.43
Less: Transfer from
Revaluation 1,987.14
Reserve 5,195.29 1,025
Profit before Tax 18,433.23 3,634
Less: Provision for
Current Taxation 1,206.50 238
Provision for
Fringe Benefit Tax 56.87 11
Provision for
Deferred Tax 1860.54 367
Profit after Tax 15,309.32 3,018
Add: Balance in Profit
and Loss Account 4,363.29 861

Amount Available
for Appropriation 19,672.61 3,879

Appropriations:

General Reserve 11,728.92 2,312
Debenture Redemption Reserve 340.05 67
Dividend on Equity Shares 1,897.05 374
Tax on dividend 322.40 64
Balance carried to Balance Sheet 5,384.19 1,062
19,672.61 3,879

* 1$ = Rs. 44.90 Exchange Rate as on March 31, 2010 (1$ = Rs 50.72 as on
March 31, 2009).

Results of Operations

The year under review was a transformational year for the Company. The
Company has set new global benchmarks for project execution. This was a
landmark year for the Company for its operating performance with earnings
growth amidst extraordinary challenges of price volatility and demand
reduction.

During the year, the Company has scaled new heights and set several new
benchmarks in terms of sales, profits, networth and assets. Turnover for
the year was Rs. 2,00,400 crore ( $ 44.6 billion) against Rs. 1,46,328
crore in the previous year. Exports were higher by 24% at Rs. 1,10,176
crore ($ 24.5 billion). Profit after tax for the year was Rs. 16,236 crore
($ 3.6 billion) as against Rs. 15,309 crore ($ 3.1 billion).

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. 17,972 crore ($ 4.0
billion) was paid in the form of various taxes and duties.

Dividend

Your Directors have recommended a dividend of Rs. 7/- per Equity Share
(last year Rs. 13/- per Equity Share on pre bonus share capital) for the
financial year ended March 31, 2010, amounting to Rs. 2,430 crore
(inclusive of tax of Rs. 346 crore) one of the highest ever 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 11, 2010; 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.

The dividend payout for the year under review has been formulated in
accordance with the Company's policy to pay sustainable dividend linked to
long term performance, keeping in view the Company's need for capital for
its growth plans and the intent to finance such plans through internal
accruals to the maximum.

Credit Rating

The Company continues to have the highest domestic credit ratings of AAA
from CRISIL and Fitch. Moody's and S&P have reaffirmed investment grade
ratings for international debt of the Company, as Baa2 and BBB,
respectively. The Company's international rating from 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 Company implemented the Employees Stock Option Scheme (Scheme'') in
accordance with the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('the
SEBI Guidelines'). The Employees Stock Compensation Committee, constituted
in accordance with the SEBI Guidelines, administers and monitors the
Scheme.

The applicable disclosures as stipulated under the SEBI Guidelines as at
March 31, 2010 (cumulative position) are given below:

a. (1) Options Granted 2,98,13,100 (Pre Bonus)
5,96,26,200 (Post Bonus)

b. (1) Exercise Price
Pre Bonus Post Bonus
Option Exercise Option Exercise
Granted Price Granted Price

2,87,28,000 1284* 5,74,56,000 642*
27,000 1684* 54,000 842*
10,08,000 2292* 20,16,000 1146*
50,100 1289* 1,00,200 644.5*

* Plus applicable taxes, as per law.

(1) In view of issue of Bonus shares in the ratio of one share for every
one share held as on record date, the number of Options has been doubled
and Exercise Price halved.

c. Options Vested 56,88,200

d. Options Exercised 10,71,912

e. The total number of shares arising as a 10,71,912
result of exercise of Options

f. Options Lapsed 85,94,874

g. Variation in terms of Options:

Subject to the conditions under the Scheme, the
vesting schedule from April, 2009 onwards has been
deferred by one year, save and except the options
due for deceased employees.

h. Money realised by exercise 68,81,67,504
of Options

i. Total number of Options in force 499,59,414
[(a) - (d) - (f)]

j. Employee wise details of Options granted
(Post Bonus) to:

i. Senior managerial personnel

1. Shri Nikhil R. Meswani 14,00,000
2. Shri Hital R. Meswani 14,00,000
3. Shri Hardev Singh Kohli 1,00,000
4. Shri P.M.S. Prasad 10,00,000

ii. Any other employee who received a grant in
any one year of Options amounting to 5%
or more of Options granted during that year Nil

iii. Identified employees, who were granted Nil
Options, during any one year, equal to
or exceeding 1% of the issued capital
(excluding outstanding warrants and
conversions) of the Company at the
time of grant

m. Diluted Earnings Per Share (EPS) before Rs. 49.65
exceptional items pursuant to issue of shares
on exercise of Options calculated in
accordance with Accounting Standard (AS)
20 'Earnings Per Share'.

The issuance of equity shares pursuant to exercise of Options does not
affect the profit and loss account 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.

The Company has entered into various contracts in the area of oil and gas,
refining and petrochemicals businesses. While benefits from such contracts
will accrue in future years, their progress is periodically monitored.

Some of the major events of the year include the following:

KG D6 completed 365 days of 100% uptime and zeroincident production. Gas
production from KG D6 has ramped up to 60 MMSCMD in a short span of 9
months from commencement. KG D6 has current production of about 60 MMSCMD.
The design capacity of the KG D6 deepwater gas production facilities were
assessed and achieved a flow rate of 80 MMSCM.

GSPAs have been executed in line with the Government of India's gas
utilization policy for over 69 MMSCMD in the fertilizers, power, city gas
distribution, steel, LPG, refinery and petrochemical sectors.

During the year, development of Panna-K (PK) area was completed.

The Company had made four new gas discoveries during the year.

* Dhirubhai-43 in Well AA1 in CB10 block

* Dhirubhai-44 in Well R1 in KGVD3 block

* Dhirubhai-45 in Well BF1 in CB10 block

* Dhirubhai-46 in Well AH1 in CB10 block

Subsequent to series of new discoveries in the southern and deeper areas of
the KG D6 block, an optimized development plan has been submitted to DGH in
December 2009.

Major events after the end of the financial year till the date of this
report are as under.

* The Company entered into a joint venture with USA based Atlas Energy,
Inc. (Atlas) under which the Company acquired 40% interest in Atlas's core
Marcellus Shale acreage position.

* The Company has become a partner in approximately 300,000 net acres of
undeveloped leasehold in the core area of the Marcellus Shale in
southwestern Pennsylvania for an acquisition cost of US$ 339 million and an
additional US$ 1.36 billion capital costs under a carry arrangement for 75%
of Atlas's capital costs over an anticipated seven and a half year

development program. While Atlas will serve as the development operator,
Reliance is expected to begin acting as development operator in certain
regions in the coming years as part of the joint venture.

* Atlas will continue acquiring leasehold in the Marcellus shale region and
the Company will have the option to acquire 40% share in all new acreages.
The Company has also obtained the right of first offer with respect to
potential future sales by Atlas of around 280,000 additional Appalachian
acres currently controlled by Atlas (not included in the present joint
venture).

The Hon'ble Supreme Court of India has delivered its judgment in the RNRL-
RIL legal dispute. The judgment recognized the dominant role of the
provisions of the Production Sharing Contract and has upheld the policies
formulated by the Government under which it has the authority to regulate
the production and distribution of natural gas.

In view of the findings of the judgment, the Company can sell gas only at
the price approved by the Government and only to the entities who have been
allocated gas under the Gas Utilisation Policy. RIL has no ability to
deviate from price, quantity and tenure as determined under Government's
policies, or to discriminate amongst various consumers.

The judgment of the Hon'ble Supreme Court has set at rest numerous issues
which had been raised in relation to the gas discovered and produced by the
Company.

Subsidiaries

Ministry of Corporate Affairs, Government of India has granted approval
that the requirement to attach various documents in respect of subsidiary
companies, as set out in sub-section (1) of Section 212 of the Companies
Act, 1956, shall not apply to the Company. Accordingly, the Balance Sheet,
Profit and Loss Account and other documents of the subsidiary companies are
not being attached with the Balance Sheet of the Company.

Financial information of the subsidiary companies, as required by the said
approval, is disclosed in the Annual Report. 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 financial results of its
subsidiary companies.

Details of major subsidiaries of the Company are covered in Management's
Discussion and Analysis Report forming part of the Annual Report.

Directors

Shri Pawan Kumar Kapil was appointed as an additional Director effective
May 16, 2010. He was also appointed as wholetime director designated as
Executive Director for three years. In terms of Section 260 of the
Companies Act, 1956 he shall hold office only upto the date of the ensuing
Annual General Meeting. The Company has received requisite notice in
writing from a member proposing his candidature for the office of Director
liable to retire by rotation.

Shri Hital R. Meswani, Shri Mahesh P. Modi, Dr. Dharam Vir Kapur, Dr.
Raghunath A. Mashalkar, Directors, retire by rotation and being eligible,
offer themselves for reappointment at the ensuing Annual General Meeting.
Your Directors express their profound grief on the unexpected sudden demise
of Shri R. Ravimohan on December 28, 2009.

Shri H.S. Kohli, Director has resigned from the Board effective May 16,
2010.

The Board placed on record its deep sense of appreciation for the
invaluable contribution made by Shri H.S. Kohli and Shri R. Ravimohan
during their tenure as wholetime directors of the Company.

Group

Pursuant to intimation from the Promoters, the names of the Promoters and
entities comprising group' are disclosed in the Annual Report for the
purpose of the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997.

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,
2010, 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 judgements 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, 2010 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.

Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial
Statements read with Accounting Standard 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.

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
reappointment.

The Company has received letters from all of them to the effect that their
reappointment, if made, would be within the prescribed limits under Section
224(1B) of the Companies Act, 1956 and that they are not disqualified for
reappointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Auditors' Report are self-
explanatory and do not call for any further comments.R....more

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