Independent Auditors' Report

TO THE MEMBERS OF RELIANCE INDUSTRIES LIMITED

REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Reliance Industries Limited
(the Company), which comprise the Balance Sheet as at arch !", #$"%, the Statement
of &rofit and Loss and Cash 'low Statement for the year then ended, and a summary of
significant accounting policies and other e(planatory information)
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
*he Company+s anagement is responsi,le for the preparation of these financial
statements that give a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the -ccounting Standards notified
under the Companies -ct, "./0 (the -ct) read with the 1eneral Circular "/2#$"! dated
"!th Septem,er, #$"! of the inistry of Corporate -ffairs in respect of Section "!! of
the Companies -ct, #$"! and in accordance with the accounting principles generally
accepted in India) *his responsi,ility 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
3ur responsi,ility is to e(press an opinion on these financial statements ,ased on our
audit) We conducted our audit in accordance with the Standards on -uditing issued ,y the
Institute of Chartered -ccountants of India) *hose Standards re4uire that we comply with
ethical re4uirements and plan and perform the audit to o,tain reasona,le assurance a,out
whether the financial statements are free from material misstatement)
-n audit involves performing procedures to o,tain audit evidence a,out the amounts and
disclosures in the financial statements) *he procedures selected depend on the auditor+s
5udgment, including the assessment of the ris6s of material misstatement of the financial
statements, whether due to fraud or error) In ma6ing those ris6 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, ,ut not for the purpose of e(pressing an opinion on the effectiveness of
the Company+s internal control) -n audit also includes evaluating the appropriateness of
accounting policies used and the reasona,leness of the accounting estimates made ,y
management, as well as evaluating the overall presentation of the financial statements)
We ,elieve that the audit evidence we have o,tained is sufficient and appropriate to
provide a ,asis for our audit opinion)
OPINION
In our opinion and to the ,est of our information and according to the e(planations given
to us, the aforesaid financial statements give the information re4uired ,y the -ct in the
manner so re4uired and give a true and fair view in conformity with the accounting
principles generally accepted in India7
(a) In the case of the Balance Sheet, of the state of affairs of the Company as at arch !",
#$"%8
(,) In the case of the Statement of &rofit and Loss, of the profit of the Company for the
year ended on that date8 and
(c) In the case of the Cash 'low Statement, of the cash flows of the Company for the year
ended on that date)
REPORT ON OTHER LEGAL AND REGULATORY REUIREMENTS
") -s re4uired ,y the Companies (-uditor+s Report) 3rder, #$$! (the 3rder) issued ,y the
Central 1overnment of India in terms of Section ##9(%-) of the -ct, we give in the
-nne(ure a statement on the matters specified in paragraphs % and / of the 3rder)
#) -s re4uired ,y Section ##9(!) of the -ct, we report that7
a) We have o,tained all the information and e(planations which to the ,est of our
6nowledge and ,elief were necessary for the purpose of our audit8
,) In our opinion, proper ,oo6s of account as re4uired ,y law have ,een 6ept ,y the
Company so far as appears from our e(amination of those ,oo6s)
c) *he Balance Sheet, the Statement of &roit and Loss, and the Cash 'low Statement dealt
with ,y this Report are in agreement with the ,oo6s of account)
d) In our opinion, the Balance Sheet, the Statement of &roit and Loss, and the Cash 'low
Statement comply with -ccounting Standards notified under the -ct read with the
1eneral Circular "/2#$"! dated "!th Septem,er, #$"! of the inistry of Corporate
-ffairs in respect of Section "!! of the Companies -ct, #$"!
e) 3n the ,asis of the written representations received from the directors as on arch !",
#$"%, ta6en on record ,y the Board of :irectors, none of the directors is dis4ualified as
on arch !", #$"%, from ,eing appointed as a director in terms of Section #9%(")(g) of
the -ct)
Anne!ure to Independent Auditors' Report
Re"erred to in P#r#$r#p% & under t%e %e#din$ o" 'report on ot%er (e$#( #nd
re$u(#tor) re*uire+ents' o" our report o" e,en d#te
") In respect of its fi(ed assets7
a) *he Company has maintained proper records showing full particulars including
4uantitative details and situation of fi(ed assets on the ,asis of availa,le information)
,) -s e(plained to us, all the fi(ed assets have ,een physically verified ,y the
management in a phased periodical manner, which in our opinion is reasona,le, having
regard to the si;e of the Company and nature of its assets) <o material discrepancies were
noticed on such physical verification)
c) In our opinion, the Company has not disposed off a su,stantial part of its fi(ed assets
during the year and the going concern status of the Company is not affected)
#) In respect of its inventories7
a) *he inventories have ,een physically verified during the year ,y the management) In
our opinion, the fre4uency of verification is reasona,le)
,) In our opinion and according to the information and e(planations given to us, the
procedures of physical verification of inventories followed ,y the management are
reasona,le and ade4uate in relation to the si;e of the Company and the nature of its
,usiness)
c) *he Company has maintained proper records of inventories) -s e(plained to us, there
were no material discrepancies noticed on physical verification of inventories as
compared to the ,oo6 records)
!) In respect of the loans, secured or unsecured, granted or ta6en ,y the Company to 2
from companies, firms or other parties covered in the register maintained under Section
!$" of the Companies -ct, "./07
a) *he Company has given loans to two su,sidiaries) In respect of the said loans, the
ma(imum amount outstanding at any time during the year was Rs) #$,.// crore and the
year=end ,alance is Rs) ">,.%" crore (including interest free loan of Rs) "!,%/% crore))
,) In our opinion and according to the information and e(planations given to us, the rate
of interest and other terms and conditions of the loans given ,y the Company, are not
prima facie pre5udicial to the interest of the Company)
c) *he principal amounts are repaya,le over a period of three to five years, while the
interest is paya,le annually, ,oth at the discretion of the Company)
d) In respect of the said loans and interest thereon, there are no overdue amounts)
e) *he Company has not ta6en any loan during the year from companies, firms or other
parties covered in the Register maintained under Section !$" of the Companies -ct,
"./0) Conse4uently, the re4uirements of Clauses (iii) (f) and (iii) (g) of paragraph % of
the 3rder are not applica,le)
%) In our opinion and according to the information and e(planations given to us, there is
an ade4uate internal control system commensurate with the si;e of the Company and the
nature of its ,usiness for the purchases of inventory and fi(ed assets and for the sale of
goods and services) :uring the course of our audit, we have not o,served any continuing
failure to correct ma5or wea6nesses in such internal control system)
/) In respect of the contracts or arrangements referred to in Section !$" of the Companies
-ct, "./07
(a) In our opinion and according to the information and e(planations given to us, the
transactions made in pursuance of contracts or arrangements that need to ,e entered in the
register maintained under Section !$" of the Companies -ct, "./0 have ,een so entered)
(,) In our opinion and according to the information and e(planations given to us, the
transactions made in pursuance of contracts 2 arrangements entered in the Register
maintained under section !$" of the Companies -ct, "./0 and e(ceeding the value of Rs)
/,$$,$$$ in respect of each party during the year have ,een made at prices which appear
reasona,le as per information availa,le with the Company)
0) -ccording to the information and e(planations given to us, the Company has not
accepted any deposit from the pu,lic) *herefore, the provisions of Clause (vi) of
paragraph % of the 3rder are not applica,le to the Company)
9) In our opinion, the Company has an internal audit system commensurate with the si;e
and nature of its ,usiness)
>) We have ,roadly reviewed the cost records maintained ,y the Company pursuant to the
Companies (Cost -ccounting Records) Rules, #$"" prescri,ed ,y the Central
1overnment under Section #$.(")(d) of the Companies -ct, "./0 and are of the opinion
that prima facie the prescri,ed cost records have ,een maintained) We have, however, not
made a detailed e(amination of the cost records with a view to determine whether they
are accurate or complete)
.) In respect of statutory dues7
a) -ccording to the records of the Company, undisputed statutory dues including
&rovident 'und, Investor ?ducation and &rotection 'und,?mployees+ State Insurance,
Income=*a(, Sales *a(, Wealth *a(, Service *a(, Customs :uty, ?(cise :uty, Cess, and
other material statutory dues have ,een generally regularly deposited with the appropriate
authorities) -ccording to the information and e(planations given to us, no undisputed
amounts paya,le in respect of the aforesaid dues were outstanding as at arch !", #$"%
for a period of more than si( months from the date of ,ecoming paya,le) -mounts due
and outstanding for a period e(ceeding 0 months as at arch !", #$"% to ,e credited to
Investor ?ducation and &rotection 'und of Rs) "# crore, which are held in a,eyance due
to pending legal cases, have not ,een considered)
"$) *he Company does not have accumulated losses at the end of the financial year) *he
Company has not incurred cash losses during the financial year covered ,y the audit and
in the immediately preceding financial year)
"") Based on our audit procedures and according to the information and e(planations
given to us, we are of the opinion that the Company has not defaulted in repayment of
dues to financial institutions, ,an6s and de,enture holders)
"#) In our opinion and according to the e(planations given to us and ,ased on the
information availa,le, no loans and advances have ,een granted ,y the Company on the
,asis of security ,y way of pledge of shares, de,entures and other securities)
"!) In our opinion, the Company is not a chit fund 2 nidhi 2 mutual ,enefit fund 2 society)
*herefore, the provisions of clause ((iii) of paragraph % of the 3rder are not applica,le to
the Company)
"%) *he Company has maintained proper records of the transactions and contracts in
respect of dealing or trading in shares, securities, de,entures and other investments and
timely entries have ,een made therein) -ll shares, securities, de,entures and other
investments have ,een held ,y the Company in its own name)
"/) *he Company has given guarantees for loans ta6en ,y 3thers from ,an6s and
financial institutions) -ccording to the information and e(planations given to us, we are
of the opinion that the terms and conditions thereof are not prima facie pre5udicial to the
interest of the Company)
"0) *he Company has raised new term loans during the year) *he term loans outstanding
at the ,eginning of the year and those raised during the year have ,een applied for the
purposes for which they were raised)
"9) -ccording to the information and e(planations given to us and on an overall
e(amination of the Balance Sheet of the Company, we are of the opinion that there are no
funds raised on short=term ,asis that have ,een used for long=term investment)
">) *he Company has not made any preferential allotment of shares to parties and
companies covered in the Register maintained under Section !$" of the Companies -ct,
"./0)
".) *he Company has created securities 2 charges in respect of secured de,entures issued)
#$) *he Company has not raised any monies ,y way of pu,lic issues during the year)
#") In our opinion and according to the information and e(planations given to us, no
material fraud on or ,y the Company has ,een noticed or reported during the year)