Reliance Securities

2.1 Industry Profile

Financial Market
Financial Market word itself says market of Financial products where market is the place where buyer buys something for fulfillment of needs and seller sell something in exchange of money or to earn money . Financial market is typically place by having transparent pricing, with basic rules on trading, cost and fees and market determining the price of securities. In economic terms financial market is mechanism that allows people to buy and sell financial securities or place where buyer and seller involved in purchase and sales of financial product like equity, bonds, currencies and derivetatives.

Types of financial marketCapital market

Capital market is market where individuals invest for a longer duration i.e. more than a year is called as capital market. The capital market has two segments mainly 1- Debt segment - The Debt segment deals with debt paper like government bonds and corporate debentures. 2 Equity segment The Equity segment deals with transactions in equity shares. Capital market is important from the point of view of the investor as well as the entity requiring funds. The investor has saving or surplus funds which the investor would like to park in investment avenues giving good return and with the safety of funds. The entity requiring funds could be a company for expansion or growth and could be government of India for various welfare programs or for bridging the gap between budget revenue and expenditure. Therefore, capital market essentially is an intermediary between the investor and the entity requiring funds. Capital market divided into following parts:

1. Primary Market
Primary market is form of capital market where various companies issue new stock. Primary market is a form of market where stocks and securities are issued for the first time by companies. Its called as IPO i.e. initial public offer. Only listed company can make IPO to investor. A company must have three years profits record for being eligible to make on IPO. At present the book building route is to be followed for an IPO where investors actually bid for shares at a price which is

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Reliance Securities appropriates according to their judgment and therefore unlike in the past all appoints a lead book runner and the promoters along with the lead book runner stipulates a price banner. Investor can apply for the shares at any price within the price ban. The other entities involved in an IPO are underwritten to the issue bankers to issue and register to the issue. The lead book runner is responsible for coordinating the activities of all the participants. The underwriters provide an insurance to the issue in the sense that if the public response is not adequate then the underwriter will take up the under subscription portion of the issue.

2. Secondary Market
The secondary market is for transacting shares of listed companies and therefore after an investor receives allotment in the primary market then he cancelled the shares in the secondary market. In the secondary market , the transactions are done on a T+2 settlement basis. It is called a rolling settlement. The investor whether he purchases or rolls the shares the settlement is done on T+2 basis. T stands for transaction day and therefore if the transaction day is a Monday the settlement would be on Wednesday. Settlement involves making payment for the shares sold. Time is very important in the stock market and therefore if shares are sold on the a Monday then they must be transferred from the sellers account to the brokers account on or before commencement of the market on Wednesday. Any delay would entail optioning of shares.

3. Money Market
The money market is a segment of the financial market in which financial instrument with high liquidity and very short terms are traded. Money market is a short term for money investment where the duration of the debt paper is below 365 days. The majority of different papers range between one working day to 364 days . He major players in the money market are scheduled commercial banks, financial institution, insurance companies, and mutual funds. The shortest avenue for investment in the money market is the call money. Money market consist certificates of deposit (CDs), Call money, commercial paper, treasury bills, municipal notes, repurchase agreement. Money market investments are also called cash investments because of their short maturities.

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4. Derivative Market
The derivate is named so for a reason : its value is derived from its underlying asset or assets. A derivative is a contract, but in this case the contract price is determined by the market price of the core asset. If that found complicated, its because it is. The derivatives market adds yet another layer of complexity and is therefore not ideal for inexperienced traders looking to speculate. Examples of common derivatives : are forwards, futures, options ,swaps and contracts for difference (CFDs). There are also many derivatives , structured products and collateralized, obligations available, mainly in the over the counter market, that professional investors, institutions and hedge fund managers use to varying degrees but that play an insignificant role in private investing.

5. Spot market
Investing in spot market is highly sophisticated, with opportunities for both big losses and big gains. In the spot market, goods are sold for cash and are delivered immediately. Prices are settled in cash on the spot at current market prices. The spot market is complex and dedicate and not suitable for inexperienced traders. A market in which commodities, such as grain, Gold, crude oil or RAM chips, are bought and sold for cash and delivered immediately. Also called cash market .

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Functions of Financial Markets

Borrowing and lending: Financial markets provide funds to investors by lending money at an interest rate known as the cost of borrowing. Price determination: Sets or defines fixed or volatile prices for each type of instrument in the market. Information collection and analysis: Important information used by market participants to value or estimate prices of a certain instrument. Risk sharing: Financial markets eliminate a type of risk known as systematic risk through investment diversification. Liquidity: The ability to quickly and directly convert securities into cash without value losses during a transaction . Efficiency: A markets ability to reflect public information on a certain instrument .

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2.2 Regulatory bodies in India

Securities and Exchange Board of India :

SEBI Act, 1992 : Securities and Exchange Board of India (SEBI) was first established in the year 1988 as a non-statutory body for regulating the securities market. It became an autonomous body in 1992 and more powers were given through an ordinance. Since then it regulates the market through its independentpowers.

Prime objectives of SEBI Protecting the interest of the investors in securities Promoting development of, and Regulating, the security market and for the matter connected therewith.
Secondary market collective investment Deriveative market

SEBI Regulat e & control

venture capital mutual funds primary market

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Functions of SEBI

Regulatory functions

Functions of SEBI

Developmental Functions

REGULATORY FUNCTION

a) Registration of brokers and sub-brokers and other players in the market b)Registration of collective investments schemes and Mutual Funds c) Regulation of stock exchanges and other self-regulatory organizations (SRO) merchant banks etc d) Prohibition of all fraudulent and unfair trade practices e) Controlling Insider Trading and takeover bids and imposing penalties for such practices

DEVELOPMENT FUNCTIONS
a) Investor education

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Reliance Securities b) Training of intermediaries. c) Promotion of fair practices and Code of conduct for all S.R.O.s d)Conducting Research and Publishing information useful to all market participants

Role of SEBI

To make rules for controlling stock exchange To provide license to dealers and brokers To stop fraud in capital markets To Control the Merger , Acquisition and Takeover the companies To audit the performance of stock market To make new rules on carry forward Transactions Details of settlement procedures and systems To educate investors

The various powers of stock exchange -

Power relating to insider trading Power relating to stock exchange and dealing in securities Power relating to violation of rules and regulations Power to regulate business of stock exchange and control it unfair trade. Power under securities contract act Power of issue new license Power of termination of listing of shares on stock exchange Powers relating to charge penalty in case of fraud and cheating

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2.3 Financial planning Financial planning means to prepare the financial plan. A financial plan is also called capital plan for the company. A financial plan is an estimate of the total capital requirements of the company. It selects the most economical sources of finance. It also tells us how to use this finance profitably. Financial plan gives a total picture of the future financial activities of the company.

Sources of funds

Utilisation of resources

Financial Planning

This all the financial planning in simple. A financial plan contains answers to the following questions: How much finance (short-term, medium-term and long-term) will be required by the company or an individual? From where this finance will be acquired (gathered)? In other words, what are the sources of finance? That is, owned capital (promoter contribution, share capital) and borrowed capital (debentures, loans, overdrafts, etc.). How the company will use this acquired finance? That is, application or utilization of funds. Financial plan is generally prepared during promotion stage. It is prepared by the Promoters (entrepreneurs) with the help of experienced (practising) professionals. The promoters must be very careful while preparing the financial plan. This is because a bad financial plan will lead to over-capitalization or under-capitalization. It is very difficult to correct a bad financial plan. Hence immense care must be taken while preparing a financial plan in company. As well as an individual also can prepare the financial planning for their future requirement with help of available resources. It mostly did by financial planner.

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Characteristics of Financial Planning:

Simplicity
The financial plan should be as simple as possible so that it can be easily understood even by a layman, property executed and administered. A complicated financial plan creates unnecessary complications and confusion.

Based on Clear-cut Objectives

The financial plan should be based on the clear-cut objectives of the company. It should aim to procure adequate funds at the lowest cost so that the profitability of the business is improved.

Flexibility
The financial plan should not be rigid, but rather flexible enough to accommodate the changes which may be introduced in it as and when necessary. The rigid composition of the financial plan may cause unnecessary irritation and may limit the future development of the business unit.

Solvency an Liquidity
The financial plan should ensure solvency and liquidity of the business enterprise. solvency requires that short-term and long-term payments should be made on due dates positively. This will ensure credit worthiness and good will to the business enterprise. Liquidity means maintenance of adequate cash balance in hand. Sometimes insufficiency of cash may make a business enterprise bankrupt.

Planning Foresight
Financial planning should have due foresight and vision to access the future needs, scope and scale of operation of the business enterprise. On the basis, financial planning should be done in such a manner that any adjustment needed in the future may be made without much difficulty. As the business proceeds, the financial adjustments become necessary which should be adjustable properly as and when desired.

Contingencies Anticipated

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Reliance Securities The financial plan should be able to anticipate various contingencies which may arise in the near future. The financial plan should make adequate provision for meeting the challenge of unforeseen events.

Minimum Dependence on Outside Sources

A long-term financial planning should aim at minimum dependence on outside resources. This can be possible by retaining a part of the profits for ploughing back.

Intensive Use of Capital

Financial planning should ensure intensive use of capital. As far as possible, a proper balance between fixed and working capital should be maintained.

Profitability
A financial plan should be drafted in such a way that the profitability of the business enterprise is not adversely affected.

Economical
The financial plan should be quite economical i.e., the cost burden of raising various types of capital should be minimum.

Government Financial Policy and Regulation

The financial policy should be prepared in accordance with the government financial policy and regulation. It should not violate it under any circumstances.

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Financial Planning Process

1 Determine Your Current Financial Situation

In this first step of the financial planning process, you will determine your current financial situation with regard to income, savings, living expenses, and debts. Preparing a list of current asset and debt balances and amounts spent for various items gives you a foundation for financial planning activities.

2 Develop Financial Goals

You should periodically analyze your financial values and goals. This involves identifying how you feel about money and why you feel that way. The purpose of this analysis is to differentiate your needs from your wants.

Specific financial goals are vital to financial planning. Others can suggest financial goals for you; however, you must decide which goals to pursue. Your financial goals can range from spending all of your current income to developing an extensive savings and investment program for your future financial security.

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3 Identify Alternative Courses of Action

Developing alternatives is crucial for making good decisions. Although many factors will influence the available alternatives, possible courses of action usually fall into these categories:

Continue the same course of action. Expand the current situation. Change the current situation. Take a new course of action.

4: Evaluate Alternatives

You need to evaluate possible courses of action, taking into consideration your life situation, personal values, and current economic conditions.

Consequences of Choices. Every decision closes off alternatives. For example, a decision to invest in stock may mean you cannot take a vacation. A decision to go to school full time may mean you cannot work full time. Opportunity cost is what you give up by making a choice. This cost, commonly referred to as the trade-off of a decision, cannot always be measured in dollars.

Decision making will be an ongoing part of your personal and financial situation. Thus, you will need to consider the lost opportunities that will result from your decisions.

Relevant information is required at each stage of the decision-making process. Changing personal, social, and economic conditions will require that you continually supplement and update your knowledge.

5 Create and Implement a Financial Action Plan

In this step of the financial planning process, you develop an action plan. This requires choosing ways to achieve your goals. As you achieve your immediate or short-term goals, the goals next in priority will come into focus.

To implement your financial action plan, you may need assistance from others. For example, you may use the services of an insurance agent to purchase property insurance or the services of an investment broker to purchase stocks, bonds, or mutual funds.

6 Re evaluate and Revise Your Plan

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Financial planning is a dynamic process that does not end when you take a particular action. You need to regularly assess your financial decisions. Changing personal, social, and economic factors may require more frequent assessments.

Types of financial planning

Short Term

Fianacial planning

Medium Term

Long Term

Short-term financial plan is prepared for maximum one year. This plan looks after the working capital needs of the company. Medium-term financial plan is prepared for a period of one to five years. This plan looks after replacement and maintenance of assets, research and development, etc. Long-term financial plan is prepared for a period of more than five year. It looks after the long-term financial objectives of the company, its capital structure, expansion activities, etc.

Objectives of Financial Planning

a. Determining capital requirements- This will depend upon factors like cost of current and fixed assets, promotional expenses and long- range planning. Capital requirements have to be looked with both aspects: short- term and long- term requirements. b. Determining capital structure- The capital structure is the composition of capital, i.e., the relative kind and proportion of capital required in the business. This includes decisions of debtequity ratio- both short-term and long- term.

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Reliance Securities c. Framing financial policies with regards to cash control, lending, borrowings, etc. A finance manager ensures that the scarce financial resources are maximally utilized in the best possible manner at least cost in order to get maximum returns on investment.

Importance of Financial Planning

Financial Planning is process of framing objectives, policies, procedures, programmes and budgets regarding the financial activities of a concern. This ensures effective and adequate financial and investment policies. The importance can be outlined as1. Adequate funds have to be ensured. 2. Financial Planning helps in ensuring a reasonable balance between outflow and inflow of funds so that stability is maintained. 3. Financial Planning ensures that the suppliers of funds are easily investing in companies which exercise financial planning. 4. Financial Planning helps in making growth and expansion programmes which helps in long-run survival of the company. 5. Financial Planning reduces uncertainties with regards to changing market trends which can be faced easily through enough funds. 6. Financial Planning helps in reducing the uncertainties which can be a hindrance to growth of the company. This helps in ensuring stability an d profitability in concern.

Advantages of Financial planning

It will help prevent you from going into a business that will not be successful. It will highlight periods where your business may need extra financial help. It will help you to spot problems early so you can make plans for the necessary solution. (For example, it will highlight whether you are holding too much stock or whether your collection is less than it should be or that you will be short of cash at a particular time).

It will inspire confidence in lenders and banks that you may have to approach for finance.

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2.4 Investment Option

In simple terms, Investment refers to purchase of financial assets. While Investment Goods are those goods, which are used for further production. Investment implies the production of new capital goods, plants and equipments. Mostly is basically earning something from the available saving with us through the different options like FD, Mutual Funds, LIC, PF, equity market, etc.

Money market funds Life Insurance Banks fixed deposit

Company FD

Investment Option

Post Office saving

Bonds & Debentures Public Provident Fund

Saving A/c

Investment Options given as follows:

Saving A/c: It is best investment option with lots of security and with good return with bank. Money market: money market funds are a specialized form of mutual funds that invest in short term fixed income instruments. This investment option usually yield better returns than saving accounts. Banks FDs: It also referred to as term deposits, this product would be offered by all banks. Minimum period is 30 days and maximum period is 6 to 12 years. Return on FD is lower as compare to money market.

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Reliance Securities Post office saving scheme: POSS are popular because they typically yield a higher return than banks FDs. The monthly income plan is good for the retired person. They can go for the POSS. POSS have various schemes like national saving source, National saving scheme etc. as well as it also help for tax benefits.

Public Provident Fund: PPF is a very attractive fixed income investment option for small investors primarily. Because low risk with safe return If you are willing to live with poor liquidity, you should invest as much as you can in this scheme before looking for other fixed income investment options.

Company FD: FDs are instruments used by companies to borrow from small investors. FDs are open throughout the year. FDs have period of 12 months and it cannot encashable before the maturity.

Bonds & Debenture: company bonds & debentures are good option other than FDs it is fixed income instrument issued by companies. As a result of an illiquid secondary market & high yield earning option in secondary market.

Mutual Funds: Its work more or less like partnership investors pool investors together their money to buy stock, bond or any other investments. It helps to earn high returns to the investors.

Equity shares: There are two ways in which you can invest in equities through the secondary market by buying shares that are listed in Stock exchanges and through the primary market by buying shares that are offered to public by companies first time after listing in stock market.

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Reliance Securities

3.0 Company Profile

Reliance Securities Limited is a Reliance Capital company and part of the Reliance Group. Reliance Capital, a constituent of CNX Nifty Junior and MSCI India, is a part of the Reliance Group. It is one of India's leading and amongst most valuable financial services companies in the private sector. Reliance Capital has interests in asset management, mutual funds, portfolio management services, pension funds, life and general insurance, private equity and proprietary investments, stock broking and depository services, investment banking, wealth management, home and commercial finance, financial products distribution, venture capital, exchanges, asset reconstruction and other activities in financial services. Reliance Capital has a net worth of Rs. 11,819 crore (US$ 2.2 billion) and total assets of Rs. 39,753 crore (US$ 7.3 billion) as on December 31, 2012. Reliance Capital is one of India's leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking groups, in terms of net worth. Reliance Securities endeavors to change the way investors transact in equities markets and avails services. It provides customers with access to Equity, Derivatives, Portfolio Management Services, Investment Banking, Mutual Funds & IPOs. It also offers secured online share trading platform and investment activities in secure, cost effective and convenient manner. To enable wider participation, it also provides the convenience of trading offline through variety of means, including Call & Trade, Branch dealing Desk and its network of affiliates. Reliance Securities has a pan India presence at more than 1,700 locations.

Vision of company By 2015, it will be a company that is known as: "The most profitable, innovative, and most trusted financial services company in India and in the emerging markets". In achieving this vision, the company will be both customer-centric and innovation-driven.

3.1 board of directors

Shri Anil D. Ambani as one of the foremost corporate leaders of contemporary India, Shri Anil D. Ambani, is the Chairman of Reliance Capital Limited, Reliance Infrastructure Limited, Reliance Communications

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Reliance Securities Limited and Reliance Power Limited. He is also on the Board of Reliance Infratel Limited and Reliance Anil Dhirubhai Ambani Group Limited. He is the President of the Dhirubhai Ambani Institute of Information and Communication Technology, Gandhinagar, Gujarat. An MBA from the Wharton School of the University of Pennsylvania, Shri Ambani is credited with pioneering several path-breaking financial innovations in the Indian capital markets. He spearheaded the countrys first forays into overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds. Under his Chairmanship, the constituent companies of the Reliance Group have raised nearly US$ 7 billion from global financial markets in a period of less than 3 years.

Shri Amitabh Jhunjhunwala, Vice-Chairman Shri Amitabh Jhunjhunwala, is a Fellow Chartered Accountant. He has had a wide exposure in developing, strategizing and overseeing businesses in financial services, power, telecommunication and entertainment sectors. Currently, he oversees and leads businesses in financial services and entertainment sectors of the Reliance group. He has experience in the areas of finance, commercial, banking, accounts and general management. Shri Jhunjhunwala is the Group Managing Director of Reliance Anil Dhirubhai Ambani Group. He is a Vice Chairman of Reliance Capital Ltd.

Shri Rajendra Chitale Shri Rajendra P. Chitale, a law graduate and an eminent Chartered Accountant, is a Managing Partner of Chitale & Associates (Indias only boutique full service structuring and tax advisory firm) and M. P. Chitale & Co. (one of the Indias leading accounting and consulting firms). He is a member of the Insurance Advisory Committee of the Insurance and Regulatory Authority of India (IRDA), and has served as a member of the Company Law Advisory Committee, Government of India, the Takeover Panel of the Securities & Exchange Board of India, Investor Education & Protection Fund Committee, Government of India, the Advisory Committee on Regulations of the Competition Commission of India, and the Maharashtra Board for Restructuring of State Enterprises, Government of

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Reliance Securities Maharashtra. He has served as a director on the boards of Life Insurance Corporation of India, Unit Trust of India, Small Industries Development Bank of India, National Stock Exchange of India Ltd., Asset Reconstruction Company (India) Ltd., SBI Capital Markets Ltd.

Dr. Bidhubhusan Samal Dr. Bidhubhusan Samal, Master in Agriculture (Gold Medalist) and doctorate in Economics from Kalyani University, West Bengal. He is also a Post Graduate Diploma holder in Bank Management from the National Institute of Bank Management, Pune. He has more than 30 years of work experience in the field of Banking, Securities Markets and Industrial Finance. He has served as Chairman and Managing Director of Allahabad Bank, Chairman and Managing Director of Industrial Investment Bank of India and as Member of the Securities Appellate Tribunal. Presently, he is a member of the Task Force set up by the Ministry of Heavy Industries and Public Enterprises, Government of India and Employment Mission set up by the Government of Orissa.

Shri V. N. Kaul Shri V. N. Kaul, is a former Comptroller and Auditor General of India (2002 to 2008). He completed his Masters degree from the University of Delhi in 1964. He joined the Indian Administrative Service in 1965. After completion of his tenure as C&AG, he was elected by the UN General Assembly to the United Nations Independent Audit Advisory Committee in 2008 and served as Vice Chairman of the Committee upto January 2011. Prior to his appointment as C&AG Shri Kaul held senior positions in the Government and in the United Nations. In Government of India he was inter-alia Secretary in the Ministries of Petroleum and Natural Gas, Chemicals and Fertilisers and Coal. He has also been Principal Secretary, Finance of Madhya Pradesh. He has served as Chairman of public sector companies and as Director of many private and public sector companies including Tata Exports and MMTC. He was with the United Nations- ESCAP, Bangkok as Advisor, Trade Policy and Negotiations for Asia-Pacific Region from 1991 to 1998. He is a Fellow of the EDI, Washington.

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Reliance Securities

SECTOR: MINING AND OIL AND GAS Sector analysis of mining industryIndia hosts a wide range of globally significant mineral resources, including: four fuel minerals (such as coal and uranium); 11 metallic minerals (such as iron); 22 minor minerals; and 52 nonmetallic minerals (such as clay). The country ranks among the world's top five nations for its core competency commodity reserves of coal and iron ore. Iron ore reserves are estimated in the region of 23bnt (bn tonnes) and account for 6% of global reserves, while coal reserves are reported to be around 255bnt. India is the world's third-largest producer of coal, fourth-largest producer of iron ore and the fifth-largest producer of bauxite. However, only 10% of the country's landmass has been explored due primarily to significant regulation and bureaucratic obstacles.

India's mining industry is set to reach US$36.2bn by 2016, as output growth of key minerals remain strong. However, growth in 2012 and beyond will continue to be curtailed by India's poor operating environment. A bright spot, however, is the increasing number of Indian companies venturing overseas to secure stable, long-term supplies of minerals such as coal and iron ore in a bid to meet fast-rising domestic demand.

India's regulatory environment is prohibitive for investors although recently proposed legislation is a step in the right direction. In the past, mining permits/licences are issued contingent on success in the reconnaissance phase. This practice exposes firms to high levels of risk. However, the proposed 2011 mines and minerals development and regulation (MMDR) bill allows for the granting of non-exclusive reconnaissance licences and high-tech reconnaissance/exploration licences based on ability and intention to develop an area. The new bill also calls for a system for bidding licences, which can create a market for these licences, increasing transparency. A negative for the proposed MMDR bill will be the additional taxes to be levied for community development.

India's mining sector is highly stratified. There are a number of giant, mostly state-owned mines that have an outsized effect on total output and at the same time there are a large number of

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Reliance Securities small and inefficient mines, many of them illegal. According to Austrade, 5% of operating mines in India produce about 50% of the country's mineral output. Given the sector's strategic and economic importance, there is significant government involvement, with the sector dominated by state-owned companies or public sector undertakings (PSUs) such as National Aluminium Corp (NALCO), SAIL, National Mineral Development Corp (NMDC) and Coal India. According to the United States Geological Survey, PSUs contribute about 85% of India's total value of mineral production and are the main producers of key commodities such as coal, iron ore, aluminium, copper and gold.

Business Monitor International's India Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's mining industry. Challenges faced by mining industries Financing and managing capital projects

As with other aspects of the mining industry, the sheer scale of change in the outlook for capital programmes is truly astonishing. Prior to 2008, the financing issue was how to find the right capital structures in an environment of healthy operational cash flows, while a series of industry bottlenecks were impacting the miners ability to bring new supply on stream. Since the summer of 2008, the environment has been one of restricted access to all types of finance as the global financial crisis persists from IPOs to any refinancing facility. In addition, lower commodities prices have significantly reduced operational cash flows and, therefore, the companies ability to self-finance capital programmes. It is on the demand side, however, where Chinas post-Olympic industrial slump has hit miners the most, raising questions about the logic of bringing new supply into the market.

Due to differences in the scale and nature of their capex programmes, the downturns impact on majors, mid-tier producers and juniors varies; therefore they face different challenges. In addition, the cash flow positions of most juniors are weaker than those of mid-tier producers due to lack of sellable output, making them even more vulnerable.

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Reliance Securities Most majors have been cutting back on capital programmes mainly by delaying projects, but in some cases shelving entire projects. Although the capex cutbacks are mostly driven by the need to preserve cash, they are also the result of uncertainties in the short- to medium-term supplydemand balance. On the other hand, the crisis has presented miners, particularly the majors, with opportunities to review and reduce development costs as the slump in demand works its way through the suppliers value chain. Mobile equipment suppliers have been receiving requests for delayed deliveries and even order cancellations.

As for juniors, the majority of their capital programmes are subject to financing and therefore their challenges are even greater in the current financial environment. Most juniors have reduced development costs substantially and entered in to hibernation mode to weather the storm. Mining transactions and industry consolidation

High levels of transactions across all segments of the sector involving industry players of all sizes seeking deals all over the world continue to rapidly change the face of the global mining industry. The industry's biggest companies have and will continue to seek opportunities to further distinguish their market leading scale. The global economic slow down has presented emerging economies with the opportunity to acquire assets/companies at reduced prices in order to expand the size/scope of their operations and secure much needed resources to fuel their burgeoning economic engines driving rapid growth. The challenges brought by the global financial crisis require companies to obtain access to new technologies and competencies, streamline their operations and asset portfolios, and consider novel and sometimes radical solutions to address their financing needs. The demands of the global market have been pushing the mining sector to evolve and the pressing need to explore undeveloped areas, restart stalled operations, and strategically restructure will continue to push companies to consider all available funding sources, form new ventures, invest in consortiums, acquire competitors, and dispose or acquire specific assets. Whether it be the ongoing expansion of the super-majors, the consolidation in the middle and lower tiers, integration of downstream operations in metals or power segments, or the search for resources by emerging economy players, the mining industry is poised to see more and more transaction activity off the back of already unprecedented deal volume in recent years.

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Reliance Securities Being in a position to anticipate deal opportunities or threats from competitors will be critical for any mining company navigating today's very dynamic global mining market. Responding quickly and appropriately to these deal opportunities, bridging language, legal and cultural gaps, and building the most realistic business case for a transaction decision can be challenging. At the same time, heightened transaction risks arise when there is insufficient time to learn all pertinent facts, a cultural nuance or practice is misinterpreted, or the consequences of a hostile bid are not fully understood. Improving performance and operational effectiveness

As a mature industry, mining companies must achieve enhanced profitability, in large part, through best in class performance and disciplined cost control as market demand for their products strongly fluctuates. At any point and time, commodity prices may be high or low, but management teams know that commodity price levels are cyclical. In the face of fluctuating demand and cyclical pricing, operating an efficient and streamlined business, as well as squeezing costs, is critical.

Industry consolidation in mining has created large companies who are still discovering synergies to be achieved from merger and acquisition activity. Compliance costs for environmental remediation and enhanced safety standards have trimmed already thin margins. Achieving internal efficiencies ahead of the competition is a key challenge. Investing in medium and longer term process improvements and cost control measures makes good business sense whether prices and demand are high or low. Managing risk

The global mining sector has experienced dramatic changes over the past five years. A sustained period of high commodity prices has been followed by falling industrial demand for raw material inputs, recent sharp corrections in all commodity prices, constraints on access to capital and the subsequent need for reassessment of corporate strategies.

This correction has followed a period of unprecedented global merger and acquisition activity. The previous high commodity prices, buoyant market capitalisations and optimism about the industry's long-term growth and profitability had previously seen mining companies embarking on ambitious long-term growth strategies. Consolidation through acquisition has been

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Reliance Securities increasingly viewed as a way for mining companies to overcome record high exploration costs, achieve production synergies through scale, circumvent protracted exploration and greenfield mining regulatory processes, and address specific mining skills shortages. Major capital investment decisions are being made in this increasingly volatile operating and price environment, where future returns on the capital invested are increasingly uncertain.

Given these attributes of their operating environment, global mining companies are placing increasingly higher priority on the need for effective corporate risk management. Complying with regulatory & reporting requirements

Regulatory compliance and reporting needs to be viewed as a natural extension of the governance duties shouldered by top management and corporate boards. Moreover, only good governance can ensure that compliance is aligned with the companys business objectives and risk management strategies and is thereby adding real value (and not just cost) to the organisation. Ultimately, the goal is to ensure that the spirit of compliance as well as the letter of the law is embraced in every corner of the enterprise. Addressing sustainability issues

Leading mining companies are successfully integrating sustainability into their overall strategies by: 1. 2. 3. 4. Building trust with their key stakeholders through balanced reporting on their activities Actively managing their risks Maximising the positive effects of their operations Embracing a growing body of international best practice on non-financial matters

There has also been an increase in the regulation of the mining industry in relation to issues such as: 1. 2. 3. 4. Local economic development Beneficiation (specifically in South Africa) Environmental management Climate change strategies

Sustainable development practices have the potential to leave a legacy of positive impact long after the life cycle of a mine has ended. Financial markets also are increasingly assigning a greater value to effective risk management of non-financial issues.

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Reliance Securities Recruiting and retaining a skilled workforce

Mining companies have large workforces with diverse skills and operations, often in numerous locations across the world. Relocating employees (and their families) overseas, often to developing countries where both living and working conditions are challenging, adds a further dimension and complexity to recruiting and retaining a workforce with the requisite skills and experience. The aging workforce, downturn in students from mining fields such as mining engineering and geology, and socio-political challenges such as HIV in the workforce and legislation regarding black empowerment present just a few of the HR challenges that mining companies are facing. The above issues were difficult enough to deal with in bull markets, but the global economic

downturn presents further business challenges around production, capital efficiency and cost-savings (including managing headcount). The ability to recruit strategically and retain key employees and scarce skills in mining companies is more important now than ever and is imperative to the future of the industry.

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Reliance Securities

SWOT ANALYSIS OF OIL AND GAS INDUSTRY Strengths India is the worlds fifth biggest energy consumer and continues to grow rapidly Major natural gas discoveries by a number of domestic companies hold significant

medium- to long-term potential. Demand for petroleum products Increase in demand for oil and gas High exploration portfolio

Opportunities Liquefied natural gas (LNG) imports are still set to grow rapidly over the longer term as

domestic consumption expands India has freed gasoline retail price controls Untapped domestic oil and gas potential Strong domestic energy demand growth

Weaknesses The oil and gas sector is dominated by statecontrolled enterprises, although the

government has taken steps in recent years to deregulate the industry and encourage greater foreign participation Increase in oil prices Inadequate and slowly developing infrastructure Lack of awareness in safety issues Environmental issues Threats Increased competition within government and private players Continuing government interference Changes in national energy policies

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Reliance Securities

IMPACT OF BUDGET 2012-2013

Company overview

HPCL Hindustan Petroleum Corporation Limited is a public sector oil company undertaking of the Government of India whose headquarters are situated in Mumbai, Maharashtra. It is a Navratna company having 20% market share amongst the public sector undertaking. The company was originally established as SVRCIL (Standard Vacuum Refining Company of India Limited) in July 1952. Later in 1962 the name was changed to ESSO Standard Vacuum Refining Company of India. Again in 1974, ESSO and Lube India Ltd were taken over and merged into one company which was named as Hindustan Petroleum Corporation Limited (HPCL). In 1978 CORIL, a oil refining company and in 1979 Kosan Gas company were merged into HPCL. HPCL has made a steep growth since its incorporation and presently its refining capacity has touched 16 million metric tonne (MMT) mark in 2010 which is the combined total of two its refineries- Mumbai (West Coast) of 7.3 MMTPA (Million Metric Tonnes per annum) and Vishakhapatnam, (East Coast) with a capacity of 8.8 MMTPA. These refineries produce a variety of petroleum fuels and other related products. It is also setting up a 9MMTPA refinery in Bathinda, Punjab. HPCL owns the largest lube Refinery of India that produces Lube base oils. Its capacity is 335, 000 whichis about 40% of Indias total lube base oil production.It is worlds 267th largest public corporation, according to Forbes global 500 lists of worlds largest corporations.

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Reliance Securities

HINDUSTAN PETROLEUMS DIRECTORS-

Whole Time Directors

Ex-Officio Part-Time Directors

Non-Official Part-time Directors

Shri S. Roy Choudhury Chairman & Managing Director (From 01/08/2010)

Shri P.K. Sinha Director

Dr. Gitesh K. Shah Director

Dr. V. Vizia Saradhi Director-Human Resources

Shri L.N. Gupta Director

Shri Anil Razdan Director (From 10/01/2011)

Shri B. Mukherjee Director Finance

Shri S.K. Roongta Director (From 10/01/2011)

Shri K. Murali Director Refineries

Shri P.V. Rajaraman Director (Till 19/07/2010)

Smt. Nishi Vasudeva Director Marketing (From 04/07/2011)

Prof. Prakash G. Apte Director (Till 19/07/2010)

Shri Arun Balakrishnan Chairman & Managing Director (Till 31/07/2010)

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VISION & MISSION OF HINDUSTAN PETROLEUM

Vision of Hindustan Petroleum -

To be a World Class Energy Company known for caring and delighting the customers with high quality products and innovative services across domestic and international markets with aggressive growth and delivering superior financial performance . The Company will be a model of excellence in meeting social commitment, environment, health and safety norms and in employee welfare and relations.

Mission of Hindustan Petroleum -

HPCL, along with its joint ventures, will be a fully integrated company in the hydrocarbons sector of exploration and productions, refining and marketing ; focusing on enhancement of productivity , quality and profitability ; caring for environment protection and cultural heritage. It will also attain scale dimensions by diversifying into other energy related fields by taking up transactional operations.

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