Introduction Audit Historically, the word auditing has been derived from Latin word audire which means

to hear. According to Dicksee, traditionally auditing can be understood as an examination of accounting records undertaken with a view to establishing whether they completely reflect the transactions correctly for the related purpose.
[2]

In addition the

auditor also expresses his opinion on the character of the statements of accounts prepared from the accounting records so examined as to whether they portray a true and fair picture. Definition: The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, internal auditing, and government auditing, but similar concepts also exist in project management, quality management, water management, and energy conservation. Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report. The Definition for Audit and Assurance Standard AAS-1 by the Institute of Chartered Accountants of India (ICAI): "Auditing is the independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon." Accounting:

Auditing is a vital part of accounting. Traditionally, audits were mainly associated with gaining information about financial systems and the financial records of a company or a business. Financial audits are performed to ascertain the validity and reliability of information, as well as to provide an assessment of a system's internal control. The goal of an audit is to express an opinion of the person / organization / system (etc.) in question, under evaluation based on work done on a test basis.[citation needed] Due to constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements a concept influenced by both quantitative (numerical) and qualitative factors. But recently, the argument that auditing should go beyond just true and fair is gaining momentum.[3] And the US Public Company Accounting Oversight Board has come out with a concept release on the same.[4] Cost accounting is a process for verifying the cost of manufacturing or producing of any article, on the basis of accounts measuring the use of material, labor or other items of cost. In simple words, the term, cost audit means a systematic and accurate verification of the cost accounts and records, and checking for adherence to the cost accounting objectives. According to the Institute of Cost and Management Accountants of Pakistan, a cost audit is "an examination of cost accounting records and verification of facts to ascertain that the cost of the product has been arrived at, in accordance with principles of cost accounting."[citation needed] An audit must adhere to generally accepted standards established by governing bodies. These standards assure third parties or external users that they can rely upon the auditor's opinion on the fairness of financial statements, or other subjects on which the auditor expresses an opinion.

Performance audits: Safety, security, information systems performance, and environmental concerns are increasingly the subject of audits. There are now audit professionals who specialize in security audits and information systems audits. With nonprofit organizations and government agencies, there has been an increasing need for performance audits, examining their success in satisfying mission objectives. Quality audits: Quality audits are performed to verify conformance to standards through review of objective evidence. A system of quality audits may verify the effectiveness of a quality management system. This is part of certifications such as ISO 9001. Quality audits are essential to verify the existence of objective evidence showing conformance to required processes, to assess how successfully processes have been implemented, and to judge the effectiveness of achieving any defined target levels. Quality audits are also necessary to provide evidence concerning reduction and elimination of problem areas, and they are a hands-on management tool for achieving continual improvement in an organization. To benefit the organization, quality auditing should not only report non-conformance and corrective actions but also highlight areas of good practice and provide evidence of conformance. In this way, other departments may share information and amend their working practices as a result, also enhancing continual improvement. Operations audit: An operations audit is an examination of the operations of the client's business. In this audit the auditor thoroughly examines the efficiency, effectiveness and economy of the operations with which the management of the entity (client) is achieving its objective. The operational audit goes beyond the internal controls issues since management does not achieve its objectives merely by compliance of satisfactory system of internal controls. Operational audits cover any matters which may be commercially unsound. The objective

of operational audit is to examine Three E's, namely: Effectiveness doing the right things with least wastage of resources. Efficiency performing work in least possible time. Economy balance between benefits and costs to run the operations.

A control self-assessment is a commonly used tool for completing an operations audit.

Auditors Auditors of financial statements can be classified into two categories:

External auditor / Statutory auditor is an independent firm engaged by the client subject to the audit, to express an opinion on whether the company's financial statements are free of material misstatements, whether due to fraud or error. For publicly traded companies, external auditors may also be required to express an opinion over the effectiveness of internal controls over financial reporting. External auditors may also be engaged to perform other agreed-upon procedures, related or unrelated to financial statements. Most importantly, external auditors, though engaged and paid by the company being audited, are regarded as independent auditors.

Cost auditor / Statutory Cost auditor is an independent firm engaged by the client subject to the Cost audit, to express an opinion on whether the company's Cost statements and Cost Sheet are free of material misstatements, whether due to fraud or error. For publicly traded companies, external auditors may also be required to express an opinion over the effectiveness of internal controls over Cost reporting. These are Specialized Person called Cost Accountants in India &

CMA globally either Cost & management Accountant or Certified management Accountants. The most used external audit standards are the US GAAS of the American Institute of Certified Public Accountants; and the ISA International Standards on Auditing developed by the International Auditing and Assurance Standards Board of the International Federation of Accountants.[citation needed]

Internal auditors are employed by the organizations they audit. They work for government agencies (federal, state and local); for publicly traded companies; and for non-profit companies across all industries. The internationally recognised standard setting body for the profession is the Institute of Internal Auditors - IIA (www.theiia.org). The IIA has defined internal auditing as follows: "Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes".[5] Thus professional internal auditors provide independent and objective audit and consulting services focused on evaluating whether the board of directors, shareholders, stakeholders, and corporate executives have reasonable assurance that the organization's governance, risk management, and control processes are designed adequately and function effectively. Internal audit professionals (Certified Internal Auditors - CIAs) are governed by the international professional standards and code of conduct of the Institute of Internal Auditors.[6] While internal auditors are not independent of the companies that employ them, independence and objectivity are a cornerstone of the IIA professional standards; and are discussed at length in the standards and the supporting practice guides and practice advisories. Professional internal auditors are mandated by the IIA standards to be independent of the business activities they audit. This independence and objectivity are achieved through the

organizational placement and reporting lines of the internal audit department. Internal auditors of publicly traded companies in the United States are required to report functionally to the board of directors directly, or a sub-committee of the board of directors (typically the audit committee), and not to management except for administrative purposes. As described often in the professional literature for the practice of internal auditing (such as Internal Auditor, the journal of the IIA) ,[7] or other similar and generally recognized frameworks for management control when evaluating an entity's governance and control practices; and apply COSO's "Enterprise Risk Management-Integrated Framework" or other similar and generally recognized frameworks for entity-wide risk management when evaluating an organization's entity-wide risk management practices. Professional internal auditors also use Control Self-Assessment (CSA) as an effective process for performing their work.

Consultant auditors are external personnel contracted by the firm to perform an audit following the firm's auditing standards. This differs from the external auditor, who follows their own auditing standards. The level of independence is therefore somewhere between the internal auditor and the external auditor. The consultant auditor may work independently, or as part of the audit team that includes internal auditors. Consultant auditors are used when the firm lacks sufficient expertise to audit certain areas, or simply for staff augmentation when staff are not available.

Quality auditors may be consultants or employed by the organization.

AUDIT PROGRAMME MEANING: It is desirable that in respect of each audit and more particularly for bigger audits an audit programme should be drawn up. Audit programme is nothing but a list of examination and verification steps to be applied set out in such a way that the inter-relationship of one

step to another is clearly shown and designed, keeping in view the assertions discernible in the statement of account produced for audit or on the basis of an appraisal of the accounting records of the client. In other words, an audit programme is a detailed of the accounting records of applying the audit procedures in the given circumstances with instructions for the appropriate techniques to be adopted for accomplishing the audit objectives. Businesses vary in nature, size and composition; work which is suitable to one business may not be suitable to be rendered by the auditor are the other factors that vary from assignment to assignment.

Because of such variations, evolving one audit programme applicable to all business under all circumstances is not practicable. However it becomes a necessity to specify in details in the audit programme the nature of work to be done so that no time will be wasted on matters not pertinent to the engagement and any special matter or any specific situation can be taken care of.

An audit programme consists of a series of verification procedures to be applied to the financial statements and accounts of a given company for the purpose of obtaining sufficient evidence to enable the auditor to express an informed opinion on such statements. For the purpose of programme construction, the following points should be kept in view: stay within the scope and limitation of the assignment. determining the evidence reasonable available and identify the best evidence for deriving the necessary satisfaction. Apply only these steps and procedures which are useful in accomplishing the verification purpose In the specific situation.

 consider all possibilities of error. co-ordinate the procedures to be applied to related items. 3.7 FACTORS ADVANTAGES AND DISADVANTAGES OF AUDIT PROGRAMME 3.7.1 FACTORS While construction an audit programme, the Auditor should keep the following points in his mind1. to operate within the scope and limitations of the assignment. 2. to determine the avidence reasonably available and identify the best avidence for deriving the necessary satisfaction. 3. to apply only those steps and procedures, which are useful in accomplishing the verification purpose in the specific situation. 4. to consider all possibilities of error. 5. to co-ordinate the procedures to be applied to related items. 48 3.7.2 ADVANTAGES OF AUDIT PROGRAMME It provides the assistant carrying out the audit with total and clear set of instructions of the work generally to be done. It is essential, particularly for major audits, to provide a total perspective of the work to be performed. Selection of assistants for the jobs on the basis of compatibility becomes easier when the work is rationally planned, defined and segregated. Without a written and pre-determined programme, work is necessarily to be carried out on the basis of some mental plan. In such a situation there is always a danger of ignoring or overlooking certain books and records. Under a properly

framed programme, the danger is significantly less and the audit can proceed systematically. The assistance, by putting their signature on programme, accepts the responsibility for the work carried out by them individually and, if necessary, the work done may be traced back to the assistant. The principal can control the progress of the various audits in hand by examination of audit programmes initiated by the assistants deputed to the jobs for completed work. It serves as a guide for audits to be carried out in the succeeding year. A properly drawn up audit programme serves as evidence in the event of any charge of negligence being brought against the auditor. It may be of considerable value in establishing that he exercised reasonable skill and care that was expected of professional auditor.

3.7.3 DISADVANTAGES OF AUDIT PROGRAMME The work may become mechanical and particular parts of the programme may be carried out without any understanding of the object of such parts in the whole audit scheme. The programme often tends to becomes rigid and inflexible following set grooves; the business may change in its operation of conduct, but the old programme may still be carried on. Changes in staff or internal control may render precaution necessary at points different from those originally decided upon.

 Inefficient assistants may take shelter behind the programme i.e., defend deficiencies in their work on the ground that no instructions in the matter is contained therein. A hard and fast audit programme may kill the initiative of efficient and enterprising assistants.

All these disadvantages may be eliminated by imaginative supervision of the work carried on by the assistants; the auditor must have a receptive attitude as regards the assistants; the assistants should be encouraged to observed matters objectively and bring significant matters to the notice of supervisor/principal.

INTRODUCTION TO COMPANY AUDIT STRUCTURE 8.0 Objectives 8.1 Qualification Of An Auditor 8.2 Disqualification Of Auditors 8.3 Appointment Of First Auditors 8.4 Appointment Of The Subsequent Auditor 8.5 Removal Of Auditor 8.0 OBJECTIVES After studying the unit the students will be able to Know about the Qualifications of an auditor Understand the Disqualifications of an Auditor Explain how to appoint the first auditor Know the rules and regulations related to removal of an auditor

8.1 QUALIFICATION OF AN AUDITOR The provision regarding qualification of auditor is governed by Section 226 of the Companies Act, 1956 Sec 226(1) states A person will be qualified for appointment as an auditor of a company (public or private) only if he is a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 The same section also provides that a firm of Chartered Accountants will be qualified for appointment as the auditor of a company in its firm name provided all the partners practicing in India are qualified for appointment In case of the firm being appointed as auditor, any practicing partner may act in the name of the firm. 8.2 DISQUALIFICATION OF AUDITORS The provision regarding disqualification of auditor is governed by section 226 of the Companies Act, 1956. 1. Section 226(3) The following persons are not qualified for appointment as auditors of a company: a) A body corporate an officer or employee of the company 219 b) A partner or employee of an officer or employee of the company c) A partner or employee of an officer or employee of the company d) A person who is indebted to the company for more than Rs. 1000 OR A person who has given any guarantee or provided any security in connection with the Indebtedness of any third person to the company for more than Rs. 1000.

e) A person holding any security (a security would mean an instrument carrying voting rights) of that company after a period of one year from the date of commencement of the Companies (Amendment) Act, 2000. 2. Section 226(4) A person is not eligible for appointment as an auditor of any company if he is disqualified from acting as auditor of that companys subsidiary or holding company or of any other subsidiary of the same holding company and vice- versa. 3. Section 226(5) If an auditor after his appointment, becomes subject to any of the disqualification mentioned in section 226(3) and section 226(4), he shall be deemed to have automatically vacated his office. 8.3 APPOINTMENT OF FIRST AUDITORS The main points regarding appointment of the First Auditors of a company are given in Section 224(5): 1. The first auditors of a company can be appointed by the board of directors within one month of the date of registration/ incorporation of the company by means of a resolution. 2. The auditors so appointed shall hold office until the conclusion of the first Annual General Meeting. 3. If the Board of Directors fails to appoint the First Auditor within one month, the company in a general meeting is empowered to make the appointment. 4. The auditors so appointed by the Board of Directors may be removed by the company at a general meeting which may appoint any other auditor. 5. An auditor cannot be appointed as First Auditor simply because his name has been stated in the Articles of Association.

6. The First Auditor need not sent an intimation by the company of their appointment and the First Auditor are themselves not required to inform the registrar of Companies about their acceptance/ refusal of such an appointment. 220 8.4 APPOINTMENT OF THE SUBSEQUENT AUDITOR The main points regarding appointment of Subsequent Auditor of a company are given below:1. Section 224(1) empowers the shareholders to appoint auditor at each Annual General Meeting by means of a resolution. 2. Upon an auditor being appointed in the Annual General Meeting, the company is to give intimation thereof to the concerned auditor within seven days of the appointment. 3. On receipt of the intimation from the company about his appointment, the auditor is required to send a written communication to the concerned Registrar of Companies within 30 days in form no.23B indicating whether he has accepted or declined the appointment. 4. The auditor so appointed shall hold the office from the conclusion of one Annual General Meeting to the conclusion of the next Annual General Meeting. 5. The auditor will be guilty of professional misconduct if at any time he accepts audit more than the specified numbers of audit assignments of the company u/s 224 of the Act. 8.5 REMOVAL OF AUDITOR 1. The first auditor appointed by the directors may be removed by the shareholder in the first Annual General Meeting. Such Auditors can even be removed from their office before the expiry of their term of office without the permission from the Central

Government. 2. In any other case, auditor can be removed only by the company in General Meeting after obtaining previous approval from the Central Government 3. An Auditor, on the expiry of the terms of his office may not be reappointed and thus removed from his office. a) Resolution requiring special notice (of fourteen days) should be passed at the general meeting [Sec. 225(1)]. b) On receipt of notice of resolution, company shall send copy of the notice to the retiring auditor [Sec. 225(2)]. c) On receipt of notice, retiring auditor can send written representation of a reasonable nature to the company which should be informed to the members. Normally company has to circulate such representation to the shareholders, unless it is received too late. A notice of resolution also should be circulated, stating a fact of such a representation. If the representation in not circulated for being received too late or because of the default of the company, auditor can insist it to be read at the meeting. [Sec. 225(3)]. d) However, company or any other person like directors or shareholders have a right to file a petition with Company Law 221 Board (CLB) to refrain the e) auditor from making such representation, if it is to secure needless publicity or is defamatory. In such a case, on the direction of the CLB, copies need not be sent or read at the meeting [Sec. 225(3)]. These provisions apply to removal of the auditors appointed by Central Government also. 4. The other relevant provisions are that if a new auditor is

appointed, the company should within 7 days, inform the new auditor. The new auditor should inform the Registrar within one month of such intimation received about his decision and he should also communication with the retiring auditor in this matter, is he accepts the post 222

This data can be easily copy pasted into a Microsoft Excel sheet
balance RI 200903 201303 201303

Previous Years Reliance

Industries Standalone Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '13 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 3,229.00 3,229.00 25.00 0.00

Mar '12 12 mths

Mar '11 12 mths

Mar '10 12 mths

Mar '09 12 mths

3,271.00 3,271.00 0.00 0.00

3,273.37 3,273.37 0.00 0.00

3,270.37 3,270.37 0.00 0.00

1,573.53 1,573.53 69.25 0.00

176,766.00 159,698.00 142,799.95 125,095.97 112,945.44 0.00 3,127.00 5,467.00 8,804.27 11,784.75

180,020.00 166,096.00 151,540.32 137,170.61 126,372.97 2,422.00 6,969.00 10,571.21 11,670.50 10,697.92

52,101.00 51,658.00 56,825.47 50,824.19 63,206.56 54,523.00 58,627.00 67,396.68 62,494.69 73,904.48 234,543.00 224,723.00 218,937.00 199,665.30 200,277.45 Mar '13 12 mths Mar '12 12 mths Mar '11 12 mths Mar '10 12 mths Mar '09 12 mths

Application Of Funds Gross Block 218,745.00 209,552.00 221,251.97 215,864.71 149,628.70

Less: Accum. Depreciation 103,406.00 91,770.00 78,545.50 62,604.82 49,285.64 Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance 115,339.00 117,782.00 142,706.47 153,259.89 100,343.06 13,525.00 4,885.00 12,819.56 12,138.82 69,043.83

52,509.00 54,008.00 37,651.54 23,228.62 21,606.49 42,729.00 35,955.00 29,825.38 26,981.62 14,836.72 11,880.00 18,424.00 17,441.94 11,660.21 4,571.38 49,547.00 889.00 604.57 362.36 500.13

Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans &

104,156.00 55,268.00 47,871.89 39,004.19 19,908.23 32,982.00 24,573.00 17,320.60 10,517.57 13,375.15 0.00 38,709.00 26,530.29 13,100.29 21,676.40

Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

137,138.00 118,550.00 91,722.78 62,622.05 54,959.78 0.00 0.00 0.00 0.00 0.00

79,620.00 66,244.00 61,399.87 48,018.65 42,664.81 4,348.00 4,258.00 4,563.48 3,565.43 3,010.90

83,968.00 70,502.00 65,963.35 51,584.08 45,675.71 53,170.00 48,048.00 25,759.43 11,037.97 9,284.07 0.00 0.00 0.00 0.00 0.00

234,543.00 224,723.00 218,937.00 199,665.30 200,277.45 50,533.00 45,831.00 41,825.13 25,531.21 36,432.69 557.49 498.21 446.25 392.51 727.66

profit RI 200903 201303 201303

Reliance

Industries

Mar '13

Mar '12

Mar '11

Mar '10

Mar '09

12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Expenses Selling Expenses Miscellaneous Expenses Preoperative Capitalised Total Expenses Exp and Admin Manufacturing

12 mths

12 mths

12 mths

12 mths

371,119.00 339,792.00 258,651.15 200,399.79 146,328.07 10,822.00 9,860.00 10,515.09 8,307.92 4,369.07

360,297.00 329,932.00 248,136.06 192,091.87 141,959.00 7,998.00 3,317.00 5,981.00 872.00 3,358.61 3,243.05 3,088.05 3,947.89 1,264.03 427.56

371,612.00 336,785.00 254,737.72 199,127.81 143,650.59

310,428.00 279,737.00 198,076.21 153,689.01 109,284.34 7,166.00 3,354.00 2,258.00 4,094.00 2,857.00 2,557.00 2,255.07 2,621.59 2,915.44 2,706.71 2,330.82 2,153.67 3,355.98 2,397.50 1,162.98

0.00 9,621.00 0.00

7,510.00 255.00 -37.00

7,207.83 500.52 -30.26

5,756.44 651.96 -1,217.92

4,736.60 562.42 -3,265.65

332,827.00 296,973.00 213,546.40 166,070.69 118,234.17 Mar '13 12 mths Mar '12 12 mths Mar '11 12 mths Mar '10 12 mths Mar '09 12 mths

Operating Profit PBDIT Interest

30,787.00 33,831.00 37,832.71 29,969.07 24,152.39 38,785.00 39,812.00 41,191.32 33,057.12 25,416.42 3,036.00 2,668.00 2,328.30 1,999.95 1,774.47

PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items

35,749.00 37,144.00 38,863.02 31,057.17 23,641.95 9,465.00 0.00 11,394.00 13,607.58 10,496.53 5,195.29 0.00 0.00 0.00 0.00

26,284.00 25,750.00 25,255.44 20,560.64 18,446.66 0.00 0.00 0.00 0.00 0.00

PBT (Post Extra-ord Items) 26,284.00 25,750.00 25,255.44 20,560.64 18,446.66 Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 32,286.63 32,710.59 32,733.74 32,703.74 15,737.98 65.05 90.00 557.49 61.26 85.00 498.21 61.97 80.00 446.25 49.64 70.00 392.51 97.28 130.00 727.66 5,281.00 5,710.00 4,969.14 4,324.97 3,137.34

21,003.00 20,040.00 20,286.30 16,235.67 15,309.32 22,399.00 17,236.00 15,470.19 12,381.68 8,949.83 0.00 2,628.00 447.00 0.00 2,531.00 410.00 0.00 2,384.99 386.90 0.00 2,084.67 346.24 0.00 1,897.05 322.40

Reliance Industries Key Financial Ratios

Previous Years

Mar '13 Mar '12 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) 8.54 5.78 5.91 8.27 8.27 5.70 5.70 10.25 6.70 6.80 8.97 8.97 5.99 5.99 12.18 12.29 11.42 10.00 9.00 95.36 10.00 8.50 103.43

Mar '11

Mar '10

Mar '09

10.00 8.00 115.58 758.04 431.95 64.41

10.00 7.00 91.64 587.37 378.21 64.47

10.00 13.00 153.47 902.02 704.28 30.61

1,115.93 1,008.64 -65.30 483.90 64.46

15.24 9.65 9.76 13.24 13.24 8.08 8.08 12.60 13.88 13.42

15.60 10.02 10.13 13.29 13.29 8.35 8.35 11.35 12.64 11.95

17.01 13.19 13.35 14.58 14.58 10.65 10.65 10.96 13.36 13.76

Return On Capital Employed(%) 12.50 Return On Net Worth(%) Adjusted Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Return on Net 11.66 11.66

557.49

498.21

446.25

392.51

727.66

Revaluations

557.49

507.77

462.95

419.43

802.54

Return on Long Term Funds(%) 13.14 Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Ratio Financial Charges Coverage Charges Coverage 9.66 0.30 12.78 1.43 1.12 0.30 0.24

12.78

13.37

11.71

11.34

1.44 1.17 0.36 0.30

1.16 0.94 0.46 0.38

1.04 0.69 0.49 0.44

1.06 0.87 0.65 0.59

10.12 0.36 14.39

11.66 0.46 17.40

10.97 0.49 16.08

11.85 0.65 14.58

Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio

11.04

12.78

15.56

14.37

12.56

8.69 23.78 8.69 2.24 2.04 1.57

10.42 18.40 10.42 2.05 1.91 1.49

9.59 17.05 9.59 1.58 1.66 1.19

8.29 23.67 8.29 1.24 1.48 0.96

12.92 26.29 12.92 1.01 0.79 0.89

Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios

--53.13

25.35 9.45 52.43

27.16 12.21 37.37

36.56 13.25 20.69

21.00 8.92 23.54

Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost

86.15 90.75

84.78 91.54

79.82 91.71

80.00 95.39

76.98 95.74

Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios

--

1.63

2.15

2.14

2.18

63.30

60.15

56.64

53.46

61.22

Dividend Payout Ratio Net Profit 14.64 Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times 10.09 85.36 89.91 1.79

14.67 9.35 84.21 90.20 1.95

13.66 8.17 85.87 91.66 2.03 Mar '11 61.97 446.25

14.97 9.09 84.16 90.60 2.42 Mar '10 49.64 392.51

14.49 10.82 85.92 89.41 3.53 Mar '09 97.28 727.66

Mar '13 Mar '12 Earnings Per Share Book Value 65.05 557.49 61.26 498.21

Auditor's Report (Reliance Industries) We have audited the accompanying financial statements of Reliance Industries Limited (the Company), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Year End : Mar '13

Management's Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (the Act). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(b) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003 (the Order) issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in section 211(3C) of the Act;

e. On the basis of the written representations received from the directors as on March 31, 2013, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of Section 274(1)(g) of the Act.

1. In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventories. As

explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) The Company has given loans to two subsidiaries. In respect of the said loans, the maximum amount outstanding at any time during the year was Rs. 20,316 crore and the year-end balance is Rs. 18,226 crore (including interest free loan of Rs. 13,944 crore).

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loans given by the Company, are not prima facie prejudicial to the interest of the Company.

c) The principal amounts are repayable over a period of three to five years, while the interest is payable annually at the discretion of the Company.

d) In respect of the said loans and interest thereon, there are no overdue amounts.

e) The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii)

(f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

(a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts / arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company.

6. According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess, and other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2013 for a period of more than six months from the date of becoming payable. Amounts due and outstanding for a period exceeding

6 months as at March 31, 2013 to be credited to Investor Education and Protection Fund of Rs. 10 crore, which are held in abeyance due to pending legal cases, have not been considered.

b) The disputed statutory dues aggregating Rs. 1,035 crore that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Sr. Name of No the Statute

Nature

Amount Period to which Forum

of the Dues (Rs. in the amount relates crore) where dispute is pending

1. Central Excise Excise Duty and 17 Various years Commissioner of Act, 1944 Service Tax 2010-11 1995-96 to Central Excise (Appeals)

from

111

Various years from 1991-92 to 2010-11 & Service Tax Appellate Tribunal Central Excise

Various years from 1982-83 to 1985-86 High Court

2. Central Sales Tax Sales Tax/ VAT 60 Various years Joint/Deputy

from Act, 1956 and and Entry Tax 1991-92 to 2009-10 Sales Tax Acts of various states

Commissioner/ Commissioner

(Appeals)

450

Various years from Sales Tax Appellate 1993-94 to 2008-09 Tribunal

125

Various years from 1994-95 to 2009-10

High Court

2007-08 to 2008-09 Supreme Court

3. Customs Act, 1962

Custom Duty 15

2007-08

Joint/Deputy

Commissioner/ Commissioner (Appeals)

255

2007-08

Central Excise & Service Tax Appellate Tribunal

TOTAL

1,035

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks and debenture holders.

12. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

14. The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made

therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

15. The Company has given guarantees for loans taken by Others from banks and financial institutions. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

16. The Company has raised new term loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has created securities / charges in respect of secured debentures issued.

20. The Company has not raised any monies by way of public issues during the year.

21. In our opinion and according to the information and explanations

given to us, no material fraud on or by the Company has been noticed or reported during the year.

Directors Report Year End : Mar '13

Mar 12

Dear Shareholders,

The Directors are pleased to present the 39th Annual Report and the audited accounts for the financial year ended March 31, 2013.

Financial Results

The financial performance of the Company, for the year ended March 31, 2013 is summarised below:

2012-13

2011-12

Rs. crore $ Mn* Rs. crore $ Mn*

Profit before Tax

26,284

4,842

25,750

5,061

Less: Current Tax

5,244

966

5,150

1,012

Deferred Tax

37

560

110

Profit for the year

21,003

3,869

20,040

3,939

Add: Balance in Profit & Loss Account 7,609 1,668 6,514 1,453

Add: On Amalgamation

1,116

206

29,728

5,743

26,554

5,392

Less: Appropriation:

Transferred to General Reserve

18,000

3,316

16,000

3,145

Transferred to Capital Redemption Reserve on buy back of Equity Shares 43 8 4 1

Proposed Dividend on Equity Shares

2,628

484

2,531

497

Tax on Dividend

447

82

410

81

Closing Balance

8,610

1,853

7,609

1,668

* 1 $ = Rs. 54.285 Exchange Rate as on March 31, 2013 (1 $ = Rs. 50.875 as on March 31, 2012)

Results of Operations

The global economy in the Financial Year (FY) 2012-13 improved slowly, but was short on expectations. Several European economies experienced recession due to high unemployment, banking fragility, fiscal tightening and sluggish growth. The U.S. economy improved marginally, driven mainly by housing and the consumer sectors; however, capital investments remained sluggish. Among the Asian economies, China going through a political transition, experienced considerably slow growth. Deceleration in industrial output and exports weakened India''s economic

growth significantly.

FY 2012-13 proved to be a challenging year amidst global economic uncertainties and disturbances in many parts of the world. Despite these constraints and challenging environment, the Company performed reasonably well and the highlights of the performance are as under:

- Revenue from operations increased by 9.2% to Rs. 371,119 crore (.4 billion)

- Exports increased by 15% to Rs. 239,226 crore ($ 44.1 billion)

- PBDIT decreased by 2.6% at Rs. 38,785 crore ($ 7.1 billion)

- Profit Before Tax increased by 2.1% at RS. 26,284 crore ($ 4.8 billion)

- Cash Profit was at Rs. 30,505 crore ($ 5.6 billion)

- Net Profit increased by 4.8% to Rs. 21,003 crore (.9 billion)

- Gross Refining Margin was $ 9.2 / bbl for the year ended March 31, 2013

The consolidated revenue from operations of the Company for the year ended March 31, 2013 was Rs. 397,062 crore, an increase of 10.8% on a Year-on-Year basis.

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. 28,950 crore ($ 5.3 billion) was paid in the form of various taxes and duties.

The Company featured in the Fortune Global 500 list of the world''s largest corporations for the eighth consecutive year. The company was ranked 99th based on sales and 130th based on profits.

Buy-Back of Equity Shares

The Buy-back Offer announced by the Company on January 20, 2012 was

closed on January 19, 2013. Pursuant to the said Buy-back, the Company bought back and extinguished 4,62,46,280 equity shares of Rs. 10 each of an aggregate face value of Rs. 46,24,62,800 (which includes 36,63,431 equity shares of Rs. 10 each bought back in FY 2011-12). Consequent to the Buy-back, the paid- up equity share capital of the Company as on March 31, 2013 (excluding allotment of shares made during the year pursuant to Employees Stock Option Scheme) stood at RS. 3228,47,61,257.

The Buy-back programme was the largest ever implemented to-date in the history of Indian capital markets and was EPS (Earnings Per Share) accretive for the Company. It is expected to supplement earnings growth from operations, for higher EPS, in the near future.

Dividend

Your Directors have recommended a dividend of Rs. 9.00 per Equity Share (last year Rs. 8.50 per Equity Share) for the financial year ended March 31, 2013, amounting to Rs. 3075 crore (inclusive of tax of Rs. 447 crore and net of reversal of excess provision of previous year) one

of the highest 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 13, 2013; 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 as on that date.

The dividend payout for the year under review has been formulated in accordance with shareholders'' aspirations and the Company''s policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.

Credit Rating

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

The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2013 (cumulative position) are provided in Annexure I to this Report.

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

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

RIL-BP Partnership

In its second year of the partnership, Reliance Industries Limited (RIL) and BP combined their expertise in deepwater exploration and development and operations in India. Both the teams worked closely to

understand the complex geology of the east-coast of India including KG-D6 block. The efforts are on to map out an exploration and development campaign that will efficiently target high quality prospects in deeper zones and optimise existing as well as future development plans.

Smart Transformation At Reliance (STAR)

The Company has embarked on one of the largest business transformation project STAR in order to make RIL FUTURE READY. It would help the Company bring end-to-end digital chain to free up resources, will also help enhance organisational entrepreneurship, create a world-class human resource framework to retain talent and fulfill mission of being an Employer of Choice.

Shale Gas Business

FY 2012-13 was a pivotal year for RIL''s North American Shale Gas business. It gained significant growth momentum and delivered superior performance despite adverse market conditions imposed by low gas prices

and higher service costs. It was landmark year strategically, as Reliance completed carry obligations in the Carrizo and Pioneer JVs and transitioned into post-carry mode, allowing for improved governance rights and increased alignment on activity levels.

Retail Business

The retail business continued its growth journey during the year with new store launches as well as strong same store sales growth. The business accomplished a milestone by crossing a revenue of Rs. 10,000 crore during the year. The business grew by 42% to reach revenue of Rs. 10,800 crore as against Rs. 7,599 crore registered in the previous financial year. The business has achieved cash break- even with earnings before depreciation, finance cost and tax expense (EBDIT) of Rs. 78 crore. The milestone of crossing Rs. 10,000 crore revenue and reaching cash break- even at EBDIT level is a significant step in Reliance Retail''s journey towards attaining market leadership by democratizing access to all types of products and services across all segments for the discerning Indian customer.

During the year under review, the realignment and consolidation of the various formats of retail businesses being carried on by the subsidiary companies of Reliance Retail Limited, was proposed, subject to necessary approvals of the High Court of Judicature at Bombay.

The consolidation exercise and consequent reduction in the number of companies will help in enhancing operational flexibility, efficiencies and greater and optimal utilisation of resources and also lead to significant reduction in the multiplicity of legal and regulatory compliances.

Infocomm Business

Reliance Jio Infocomm Limited RJIL (formerly Infotel Broadband Services Limited) with Broadband Wireless Access (BWA) spectrum in all the 22 telecom circles of India, plans to provide reliable fast internet connectivity through the 20 MHz, contiguous, Pan-India BWA spectrum. In addition to connectivity, RJIL also plans to enable end-to-end solutions that address the entire value chain across various digital services in key domains of national interest such as education,

healthcare, security, financial services, government-citizen interfaces and entertainment. RJIL aims to comprehensively address the requisite components of the customer need, thereby fundamentally enhancing the opportunity and experience of hundreds of millions of users in India.

RJIL has finalized key agreements with its technology partners, service providers, infrastructure providers, application partners, device manufacturers and other strategic partners for the project. It aims to create a digital eco system which can be used to benefit the industry, the government and, above all, the people of this country. RJIL has also completed the detailed planning for Pan India implementation of the infrastructure needed for the project.

Reliance Haryana SEZ

The Model Economic Township (MET) has been envisioned to be developed as an industrial infrastructure to support economic growth in a public private partnership framework with the Government of Haryana through HSIIDC Limited (a Government of Haryana company).

The start-up phase of operationalization of MET in the district Jhajjar of Haryana has commenced during the year.

Reliance Jamnagar Infrastructure Limited

During the year under review, Reliance Jamnagar Infrastructure Limited, a wholly owned subsidiary which was acting as a co-developer in the Jamnagar SEZ got amalgamated with the Company.

Expansion of Operations

Your Company has commenced implementing significant expansion plans in the Petrochemical business and on completion over the next 3 to 4 years, the overall volume is expected to increase by more than 60%. Your Company is also setting up the world''s largest petcoke gasification facility at Jamnagar to convert the lowest cost fossil fuels - coal and coke into gas.

Consolidated Financial Statements

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

Subsidiaries

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. 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 the financial results of its subsidiary companies.

Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management''s Discussion and Analysis Report.

Directors

Shri Mahesh P. Modi, Dr. Dharam Vir Kapur, Dr. Raghunath A. Mashelkar and Shri Pawan Kumar Kapil, Directors, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.

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, 2013, 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 judgments 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, 2013 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.

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 re-appointment.

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

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

Cost Auditors

The Company has appointed the following cost auditors for conducting Cost Audit for the financial year 2012-13:

(i) For the Textiles Business - M/s. Kiran J. Mehta & Co, Cost Accountants;

(ii) For the Chemicals Business - M/s. Diwanji & Associates, Cost Accountants, M/s. K. G. Goyal & Associates, Cost Accountants, M/s. V J. Talati & Co., Cost Accountants, M/s. Bandyopadhyaya Bhaumik & Co., Cost Accountants, M/s Shome & Baneijee, Cost Accountants, M/s. Kiran J. Mehta & Co, Cost Accountants and M/s. Dilip M. Malkar & Co., Cost Accountants;

(iii) For the Polyester Business - Shri Suresh D. Shenoy, Cost Accountant, M/s. V. Kumar & Associates, Cost Accountants;

(iv) For Electricity Generation - M/s. Dilip M. Malkar & Co., Cost Accountants;

(v) For Petroleum Business - M/s. V. J. Talati & Co., Cost Accountants; and

(vi) For Oil & Gas Business - M/s Kiran J. Mehta & Co., Cost Accountants; Shri Suresh D. Shenoy, Cost Accountant; M/s Bandyopadhyaya Bhaumik & Co., Cost Accountants and M/s Shome & Banerjee, Cost Accountants.

M/s Shome & Banerjee, Cost Accountants have been nominated as the Lead Cost Auditor of the Company.

Secretarial Audit Report

As a measure of good corporate governance practice, the Board of Directors of the Company appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct the Secretarial Audit. The Secretarial Audit Report for the financial year ended March 31, 2013, is provided in the Annual Report.

The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Securities Contracts (Regulation) Act, 1956, Depositories Act, 1996, The Foreign Exchange Management Act, 1999 to the extent applicable to

Overseas Direct Investment (ODI), Foreign Direct Investment (FDI) and External Commercial Borrowings (ECB), all the Regulations and Guidelines of SEBI as applicable to the Company, including The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, The Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, Listing Agreements with the Stock Exchanges and the Memorandum and Articles of Association of the Company.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the

provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in Annexure-II to this Report.

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor

Education and Protection Fund.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on June 07, 2012 (date of last Annual General Meeting) on the website of the Company (www.ril.com), as also on the Ministry of Corporate Affairs website.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming

compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Business Responsibility Report

SEBI, vide its Circular CIR/CFD/DIL/8/2012 dated August 13, 2012, mandated the top 100 listed entities, based on market capitalisation at BSE and NSE, to include Business Responsibility Report as part of the Annual Report describing the initiatives taken by the companies from Environmental, Social and Governance perspective.

Accordingly, the Business Responsibility Report is attached and forms part of the Annual Report.

Acknowledgement

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record

their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

Mukesh D. Ambani

Chairman and Managing Director

April 16, 2013

Company Profile: The Reliance Group, founded by Dhirubhai H. Ambani , is India's largest private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of $ 30 billion. The flagship company, Reliance Industries

Limited, is a Fortune Global 500 company and is the largest private sector company in India.

Dhirubhai Ambani founded Reliance as a textile company and led its evolution as a global leader in the materials and energy value chain businesses. It was in 1957 when he returned to India after a stint with A.Besse& Co., Aden he started yarn trading business from a small 500 sq.ft. office in Masjid Bunder, Mumbai.he set up his brand new mill in Naroda, Gujarat. In 1996 Reliance went on to become the biggest textile brand ??Only Vimal?. In 1977 the Reliance Textile Industries came with an IPO which was oversubscribed seven times.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products.

Starting as a small textile company, Reliance has in its journey crossed several milestones to become a Fortune 500 company in less than 3 decades.

Reliance Industries Limited operates world-class manufacturing facilities across the country at Allahabad, Barabanki, Dahej, Dhenkanal, Hazira, Hoshiarpur, Jamnagar, Kurkumbh, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and Vadodara.

The company works under different business segments: Exploration and Production

Petroleum Refining and Marketing Petrochemicals Textiles Retail DIRECTORS' REPORT

Dear Shareholders,

Your Directors are pleased to present the 38th Annual Report and the audited accounts for the financial year ended March 31, 2012.

Results of Operations

FY2011-12 was a challenging year. The global economy, barely a year after recession, witnessed lower economic growth, resulting primarily from the Euro Zone debt crisis and high oil prices, which were fuelled by uncertainties of supply. Rising unrest in Middle East and North Africa resulted in unprecedented levels of crude oil volatility. The European economies stagnated and the US witnessed a downgrade in its credit rating, while the growth engines of the global economy, China and India were forced to tighten liquidity to tame rising inflation. In addition, civil unrest in Libya and the tsunami in Japan posed further challenges. Despite these constraints and the challenging environment, the Company performed reasonably well and the highlights of the performance are as under:

Revenue from operations increased by 31.4% to Rs. 339,792 crore ($66.8 billion)

? Exports increased by 41.8% to Rs. 208,042 crore ($ 40.9 billion)

? PBDIT decreased by 3.3% to Rs. 39,811 crore ($ 7.8 billion)

? Profit Before Tax increased by 2.0% to Rs. 25,750 crore ($ 5.1 billion)

? Cash Profit decreased by 7.3% to Rs. 31,994 crore ($ 6.3 billion)

? Net Profit decreased by 1.2% to Rs. 20,040 crore ($3.9 billion)

? Gross Refining Margin at $ 8.6 / bbl for the year ended March 31, 2012

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. 28,197 crore ($ 5.5 billion) was paid in the form of various taxes and duties.

Buy Back of Equity Shares

The Board of Directors of the Company at its meeting held on January 20, 2012 unanimously approved the Buy-back of up to twelve crore fully paid-up equity shares of Rs. 10 each (hereinafter referred to as "Buy-back"), at a price not exceeding Rs. 870 per equity share, payable in cash, up to an aggregate amount not exceeding Rs. 10,440 crore, representing approximately 7.22% of the Company's total paid-up Equity Capital and Free Reserves as on March 31, 2011. The Buy-back is being made out of the free reserves and / or the securities premium account of the Company, from the open market through Stock Exchange(s) in India, as per the provisions contained in the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998. The Buy-back Offer is open up to January 19, 2013 or such earlier date as may be determined by the Company after necessary compliances. Pursuant to the aforesaid Buy-back Offer, the Company has bought back and extinguished 36,63,431 equity shares of Rs. 10 each of an aggregate face value of Rs. 3,66,34,310 as of March 31, 2012. Consequent to the Buyback, the paid-up equity share capital of the Company as on March 31, 2012 has been reduced to Rs. 3271,05,93,400. The Buy Back Committee constituted by the Board oversees all matters pertaining to the Buy-back of equity shares of the Company.

Dividend

Your Directors have recommended a dividend of Rs. 8.50 per Equity Share (last year Rs. 8 per Equity Share) for the financial year ended March 31, 2012, amounting to Rs. 2,941 crore (inclusive of tax of Rs. 410 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 June 1, 2012; 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 as on that date.

The dividend payout for the year under review has been formulated in accordance with shareholders' aspirations and the Company's policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.

Credit Rating

The Company continues to have the highest domestic credit ratings of AAA from CRISIL (S&P subsidiary) and Fitch. Moody's and S&P have reaffirmed investment grade ratings for international debt of the Company, as Baa2 positive outlook (local currency issuer rating) and BBB positive outlook respectively. The Company's international rating from Moody's and 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, 2012 (cumulative position before opening the Buy back offer) are provided in the Annexure I to this Report.

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.

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

RIL - BP Partnership

Reliance Industries Limited (RIL) and BP announced the incorporation of India Gas Solutions Private Limited, a 50:50joint venture (JV) company, which will focus on global sourcing and marketing of natural gas in India. This joint venture company is a significant step in cementing the relationship between RIL and BP, and it establishes the commitment of both the parties to the Indian market. The demand for gas has been

growing at an exponential rate and both RIL and BP anticipate natural gas to emerge as the preferred choice of fuel, given its properties as a cleaner and more sustainable fuel source.

Shale Gas

RIL entered into three JVs in 2010 as part of its strategic focus on pursuing partnerships with experienced and successful operators in the fast growing resource base of shale gas in North America. In addition to these JVs with Chevron and Carrizo in Marcellus shale play of Pennsylvania and Pioneer Natural Resources in Eagle Ford shale Play of South Texas, RIL and Pioneer also partnered in the development of midstream assets through an equity investment for servicing the gathering needs of Pioneer upstream

CHAIRMAN?S SPEECH

CHAIRMAN'S STATEMENT:

My Dear Shareowners,

It gives me great pleasure to welcome you to the 38th Annual General Meeting of Reliance Industries Limited.

The Company's accounts for the year ended March 31, 2012, along with the Directors' and Auditors' report, a Letter to the Shareholders, and Management's Discussions and Analysis, have already been circulated to you.

With your permission, I would like to lake them as read.

1. Strategic Perspective

Dear Shareowners,

At the Annual General Meeting last year, I talked of transformation being at the top of the business agenda of Reliance.

Transformation at Reliance is about Institutionalizing the competencies and capabilities of our organization and people, expanding the breadth and efficiency of our businesses and to create value for all our stakeholders.

Transformation at Reliance is to reinvent ourselves to take on the new challenges that lie ahead of us.

And to harness the tremendous opportunities on our continuous path of value creation.

In our transformation Initiative, Reliance has spent more than six million man-hours of the best brains -both from Reliance and major global consultancies.

This transformation initiative will create a robust process-driven effective organization that will attract and retain best talent with the objective of continuously outperforming its global peers.

This effort -in both scope and outcome is unique and unparalleled.

This further strengthens our ability to create continuous value across businesses for a long time.

Reliance continues on this path through strengthening our core businesses, investing for growth in India and building new businesses that meet the needs of our society.

Partnering with global leaders across all our businesses brings expertise, technology, products, brands and capital for growth.

Our partnership with BP is an example of this strategy to bring the best technology and capital to invest in the critical energy sector in India.

Our partnerships with leading global retail brands bring products that meet aspirations of our people.

And our partnerships with farmer organizations, under the auspices of the Reliance Foundation, seek to restore the pride of place for agriculture In India.

Partnerships will be an important feature of our future growth.

These partnerships are formed on the strong foundations of trust, of shared vision and strategic intent.

In my address today, I will be sharing with you insights on all these partnerships -vital for our growth and prosperity.

2. Global Economy and Reliance

Dear Shareowners,

The International business environment has become more challenging today than at any time in modern history.

We have seen two unprecedented economic Shocks in the last five years with low growth and recession-like conditions in most major economies.

The business environment in the past year has been marked by exceptional volatility in input prices and margins across the chain.

Geopolitical changes leading to supply shortages and price dislocations added to the challenge of managing our businesses.

In spite of these adverse conditions, Reliance has grown stronger by expanding its asset base and significantly improving its financial position.

We have also improved our competitive position in our core businesses.

It is today among the most profitable companies In Its sectors globally.

It has a consistent record of growth in earnings and dividend payout during this period.

3. Indian Economy and Reliance

Businesses of Reliance are equally influenced by developments In the Indian economy.

High rates of domestic inflation, adverse foreign exchange rate movements, continuing state subsidies for petroleum products and slowdown in rate of economic growth have had an impact on doing business In India.

Reliance however firmly believes in India's latent potential for economic growth, opportunities for investments and untapped entrepreneurial energies.

Reliance continues to be in the mindset of investing In India and in her future.

We believe that India is poised to be one of the growth engines of the global economy over the next decade.

Its demographics, talent pool and a democratic society give it a unique position among emerging countries globally.

Reliance has always been an Integral part of India's growth.

Our investments in the Petrochemicals business, Upstream Oil and Refining business will meet India's growing needs.

Through our investments in organized retail, we will create employment opportunities in significant numbers, both in urban and rural areas.

Our digital services business will revolutionize the lives of millions of Indians by giving them access and opportunities.

These new investments, on the back of a robust balance sheet, will create new waves of growth and value for Reliance.

4. Business and Financial Performance

Dear Shareowners,

As we enter our thirty fifth year since our IPO, It Is an appropriate moment to look back at our achievements.

Reliance has a unique track record of organic growth and value creation since it became a public company 34 years ago.

This accomplishment has very few parallels among industrial companies globally.

For its large family of shareholders, we have created value by consistent profitable growth and continuous investment in business opportunities.

Rs. 1,000 invested at the time of IPO in Reliance in 1977-78 has grown to Rs. 7.78 lakhs at a CAGR of 21.6%.

In this period our revenues have grown 27% year on year on a compounded basis.

The company's profits have grown 29% year on year on a compounded basis.

I am pleased to report another year of record performance by the company, despite the tough global and Indian economic operating environment.

For the year under review, Reliance recorded its highest ever revenues of Rs. 339,792 crore (USD 66.8 billion), a growth of 31% over the previous year.

We exported Rs. 208,042 crore (USD 40.9 billion) worth of products to Over 100 countries.

This was the highest ever exports achieved with an increase of 42% over the previous year.

The volatility in crude prices, subdued margin outlook for transportation fuels as well as petrochemicals and lower than anticipated production from the KG D6 block resulted in profits remaining at the same level as last year.

We have recommended the highest ever dividend payout in the history of the company Rs. 2,941 crore.

The Board of the company has also approved the largest ever buyback of its shares, to date, In India's corporate history by setting aside upto Rs. 10,440 crore for this purpose.

We have, to date, bought back 2.7 crore shares at a cost of Rs. 1,929 crore ? this represents 22.5 % of the cap set by the Board in terms of number of shares.

AUDITORS' REPORT

To the Members of Reliance Industries Limited

1. We have audited the attached Balance Sheet of RELIANCE INDUSTRIES LIMITED as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears from our examination of those books;

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the Directors as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub - section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS' REPORT

1. In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) The Company has given loans to two subsidiaries. In respect of the said loans, the maximum amount outstanding at any time during the year was Rs. 10,254 crore and the year-end balance is Rs. 10,239 crore (including interest free loan of Rs. 6,615 crore).

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loans given by the Company, are not prima facie prejudicial to the interest of the Company.

c) The principal amounts are repayable over a period of three to five years, while the interest is payable annually at the discretion of the Company.

d) In respect of the said loans and interest thereon, there are no overdue amounts.

e) The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act,

1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

(a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts / arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company.