Reliance Industries Limited
Annual Report 1985

Plain-text annual report

Reliance Industries Limited Annual Report 1985 50 Dhirbhai H. Ambani (Chairman & Managing Director) 1 BOARD OF DIRECTORS Dhirubhai H. Ambani (Chairman & Director Ramniklal H. Ambani (Joint Managing Director) K. Gopal Rao Natvarlal H. Ambani (Executive Director) Mukesh D. Ambani (Executive Director) Jayantilal R. Shah Mansingh L. Bhakta R. V. Madhava Rao (Nominee Director, G.I.C.) V. V. Divecha Nominee) T. Ramesh U. Pai Anil D. Ambani (Executive Director) SECRETARY Vinod M. Ambani SOLICITORS & ADVOCATES Kanga & Co. Dave & Co. AUDITORS Rajendra & Co. Chaturvedi & Shah BANKERS Syndicate Bank State Bank of India Canara Bank Bank Bank of Baroda Indian Bank Standard Chartered Bank European Asian Bank Grindlays Bank plc. REGISTRARS & TRANSFER AGENTS Reliance Consultancy Services Limited 56, Mogra Village Lane Off Old Nagardas Road Andheri (East), Bombay-400 069 FINANCIAL HIGHLIGHTS Sales Other Income Manufacturing Expenses Interest Gross Profit (A)-(B) Depreciation Net Profit (C)-(D) WHAT THE COMPANY OWNED: FIXED ASSETS Gross Block Less: Depreciation (Cumulative) Net Block Investments Current Assets WHAT THE COMPANY OWED: Long Term Funds Medium/Short Term Funds Current Liabilities and Provisions NET WORTH OF THE COMPANY: Equity Share Capital Preference Share Capital Reserves and Surplus (In million) 1985 $ 584.73 4.06 588.79 479.76 20.10 499.36 89.43 30.79 58.64 604.74 105.94 498.80 30.66 330.52 859.98 423.46 67.33 113.45 604.24 42.42 4.77 208.55 255.74 Rs. 7113.50 49.39 (A) 7162.89 5830.45 244.47 (B) 6074.92 (C) 1087.97 (D) 374.60 713.37 7356.86 1288.77 6068.09 372.98 4020.96 10462.03 5151.62 819.05 1380.19 7350.86 516.09 58.00 2537.08 3111.17 2 1984 $ 484.02 5.70 489.72 395.29 18.12 413.41 76.31 27.37 48.94 425.27 83.82 341.45 0.14 188.56 530.15 221.85 35.91 75.03 332.79 36.99 4.65 155.72 197.36 Rs. 6042.74 71.11 6113.85 4934.97 226.16 5161.13 952.72 341.73 610.99 5309.29 1046.44 4262.85 1.70 2354.06 6618.61 2769.62 448.28 936.80 4154.70 461.80 58.00 1944.11 2463.91 1983 $ 474.67 4.42 479.09 392.78 20.31 413.09 66.00 29.63 36.37 372.77 69.31 303.46 0.12 203.14 506.72 226.55 33.48 124.08 384.11 34.13 5.48 83.00 Rs. 5028.26 46.80 5075.06 4160.77 215.21 4375.98 699.08 313.83 385.25 3948.81 734.18 3214.63 1.21 2151.93 5367.77 2399.91 354.65 1314.43 4068.99 361.51 58.00 879.27 1298.78 122.61 1982 $ 417.10 2.58 419.68 355.77 19.43 375.20 44.48 14.54 29.94 366.16 43.22 322.94 0.13 196.61 519.68 267.50 23.46 134.76 425.72 19.09 5.95 68.92 93.96 Rs. 4063.31 25.15 4088.46 3465.83 189.30 3655.13 433.33 141.69 291.64 3567.08 421.00 3146.08 1.21 1915.33 5062.62 2605.98 228.53 1312.76 4147.27 185.95 58.00 671.40 915.35 Rs. 3016.57 36.37 3052.94 2578.32 167.89 2746.21 306.73 109.77 196.96 1334.62 279.01 1055.61 0.70 1565.49 2621.80 831.74 163.54 1055.53 2050.81 166.74 3.00 401.25 570.99 1981 $ 328.35 3.96 332.31 280.65 18.27 298.92 33.39 11.95 21.44 145.27 30.37 114.90 0.08 170.40 285.38 90.53 17.80 114.90 223.23 18.15 0.32 43.68 62.15 3 DIRECTORS' REPORT To the Members, Your Directors have pleasure in submitting the 12th Annual Report together with the Audited Statement of Accounts for the year ended 31st December, 1985. 1. Financial Results: Gross Profit Of the above, the following Provisions and/or Appropriations have been made: (a) Depreciation (b) Investment Allowance Reserve (c) Taxation Reserve (d) Differential Dividend pertaining to previous year There remains a balance of Adding thereto: (In million) 1985 1984 Rs. $ Rs. $ 1087.97 89.43 952.72 76.31 374.60 30.79 341.73 27.37 228.00 18.74 291.50 73.35 100.00 0.51 8.22 0.04 –– –– –– –– 703.11 57.79 633.23 50.72 384.86 31.64 319.49 25.59 (a) Balance brought forward from previous year 149.09 12.25 21.23 (b) Transfer from Investment Allowance (Utilised) Reserve –– –– 3.04 Sub-total 149.09 12.25 24.27 1.70 0.24 1.94 Deducting therefrom net effect of reversal of interest capitalised (See Note No. 14 of Schedule 'N') Less: Recommended Dividends (subject to deduction of tax) (a) On 11% Cumulative Redeemable Preference Shares (b) On 15% Cumulative Redeemable Preference Shares (c) On Equity Shares Retained Profits 81.28 67.81 6.68 5.57 –– –– 24.27 1.94 452.67 37.21 343.76 27.53 0.33 8.25 0.03 0.68 0.33 7.43 0.02 0.60 248.94 20.46 154.41 12.37 257.52 21.17 162.17 12.99 195.15 16.04 181.59 14.54 Less : Transferred to General Reserve 50.00 4.11 32.50 2.60 Balance carried to Balance Sheet 145.15 11.93 149.09 11.94 4 2. Dividends: Your Directors have recommended the following dividends (subject to deduction of tax) for the year ended 3st December, 1985, to be paid, if approved by the Shareholders at the ensuing Twelfth Annual General Meeting. On Preference Shares: (a) A dividend of Rs. 11/- ($ 0.90) per share on 30,000 Cumulative Redeemable Preference Shares of Rs. 100/- ($ 8.22) each, fully Paid-up. (b) A dividend of Rs. 15/- ($ 1.23) per share on 5,50,000 Cumulative Redeemable Preference Shares of Rs. 100/- ($ 8.22) each, fully Paid-up (A) (In million) Rs. $ 0.33 0.03 8.25 8.58 0.68 0.71 On Equity Shares: (a) A dividend at the rate of Rs. 5/- ($ 0.41) per share on 4,61,79,669 Equity Shares of Rs. 10/- ($ 0.82) each, fully paid-up 230.94 18.98 (b) A dividend at the rate of Rs. 3.35 ($ 0.27) (pro-rata) per share on 53,33,333 Equity Shares of Rs. 10/- ($ 0.82) each, fully paid-up. 17.90 1.47 (c) A dividend at the rate of Rs. 2.45 ($ 0.20) (pro-rata) per share on 53,445 Equity Shares of Rs. 10/- ($ 0.82) each, fully paid-up. 0.10 0.01 (d) A dividend at the rate of Rs. 0.20 ($ 0.02) (pro-rata) per share on 42,871 Equity Shares of Rs. 10/- ($ 0.82) each, fully paid-up Rs. 8,809($ 724). (B) TOTAL (A) + (B) –– 248.94 257.52 –– 20.46 21.17 6 3. Equity Shares for Debentures In view of persistent requests from some Debentureholders of Series 1, 11, 111 and IV who could not exercise their option for extinguishment of Debentures held by them within the time stipulated, your Company approached the Controller of Capital Issues Government of India, New Delhi, to extend the validity period of their permission. Your Company has, consequent to the necessary approvals, issued 96,316 Equity Shares of Rs. 10 ($ 0.82) each, aggregating Rs. 96.30 1$ 7.92) million to these Debentureholders. Your Directors are pleased to state that out of the total outstanding face value of Rs. 735.00 ($ 60.42) million in the form of Debentures of Series I, II, III and IV, a sum of Rs. 723.20 ($ 59.44) million have now been extinguished. The outstanding face value of these Debentures not being significant, the Board of Directors of the Company have proposed to redeem these Debentures and accordingly obtained an "in-principle" advice from the Controller of Capital Issues in this regard. Requisite resolutions seeking consent of the Shareholders and Debentureholders will be placed at their respective meetings to give effect to this. In terms of the issuance of Debentures of Series 'E', the Company issued 53,33,333 Equity Shares of Rs. 10 ($ 0.82) each at a premium of Rs. 40 ($ 3.29) per Share to the holders of these Debentures upon partial conversion of the said Debentures on 30th April, 1985. 4. Issuance of Secured Debentures-Series 'F' In order to finance a part of the capital expenditure for the enhancement of licenced capacity for the manufacture of Polyester Filament Yarn and for the establishment of new undertaking to manufacture Polyester Staple Fibre and Purified Terephthalic Acid at Patalganga, as also to augment long term resources of the Company for meeting its working capital requirements, the Company issued 15% Secured Redeemable Non- Convertible Debentures of Rs. 100 ($ 8.22) each for-cash at par aggregating 8 Rs. 2700.00 ($ 221.94) million, inter alia, to the Company's Shareholders, Debentureholders and Fixed Depositors. This Debenture Issue evoked unprecedented response both from resident and non-resident investors, the overall subscription exceeding a little over Rs. 3900.00 ($ 320.58) million establishing yet another corporate record. Since the Company could retain only Rs. 2700.00 ($ 221.94) million as per the permission granted by the Controller of Capital Issues, excess application money was refunded. As required by the Controller of Capital Issues, the Directors certify that the funds raised through these Debentures to the extent of Rs. 130.00 ($ 10.69) million have been utilised only for working capital purpose and that these funds have not been diverted for other purposes. 5. 5.1 Year in Retrospect Overall Performance The turnover during the year under review reached Rs. 7113.50 ($ 584.73) million as against Rs. 6042.74 ($ 484.02) million in the previous year, an increase of 17.72%. The gross profit also registered an increase of 25.58% viz. Rs. 1087.97 ($89.43) million from Rs. 8(0.00 ($ 68.89) million (being the comparable amount after reversing the interest that was capitalised in the previous year). 5.2 Textile Division Water Jet Looms and Projectile Jacquard Weaving Machines installed in 1984 as a part of modernisation programme at Ahmedabad are smoothly functioning. The effluent treatment plant treating 4 million gallons of water per day costing Rs. 15.00 ($1.23) million, the largest in the Textile Industry in India, was successfully commissioned. With a view to monitor treatment of effluent on a regular basis, the Company has reserved a plot of 1,500 Sq. Metres for growing cash crop by utilising this treated water. The first reports are encouraging. The Company has since enhanced the diesel generating capacity to 13MW as a stand-by to meet any contingency of power shortage. With the increased production the Company has opened additional retail outlets and the total now exceeds 1,500. 10 5.3 Fibre Division 5.3.1 Polyester Yarn Division Your Company had received an endorsement to enhance the licenced capacity from 10,000 tonnes to 25,125 tonnes per annum. This has been implemented in the third quarter of 1985. With this, the Company's profitability will further improve. 5.3.2 Polyester Staple Fibre Project Your Company commissioned in March, 1986, its Polyester Staple Fibre Plant at Patalganga (Maharashtra) with a licenced capacity of 45,000 tonnes per annum in technical collaboration with E.l.DU-PONT DE NEMOURS AND COMPANY, U.S.A., in a record time of less than 14 months from the date of issue of Letter of Intent. The Company's plants for the manufacture of Polyester are basically designed to use solely Purified Terephthalic Acid (PTA) as a raw material from the beginning for producing better quality products. The benefits arising from this project will be reflected in the accounting year 1986 onwards. 6. Projects under Implementation 6.1 Textile Division The Company has taken on hand the modernisation of Knitting and Twisting Division involving a total outlay of Rs. 670.00 ($ 55.07) million. The Company has already placed orders for imports of machinery of a value of Rs. 230.00 ($ 18.91) million, the first of which consignment has already come and the balance are on way. The modernisation of this Division of Naroda Project would contribute to further improvement in the quality of fabrics, provide for an edge over competition, increase the turnover and improve profitability. 6.2 Fibre Intermediates Division 6.2.1 Purified Terephthalic Acid (PTA) Project The Company has taken greater strides in speedily setting up its PTA Plant of licenced capacity of 75,000 tonnes per annum. The Project has progressed faster with the guidance of the technical collaborators, Messrs. Imperial Chemical Industries, U.K. and UOP Processes International Inc., U.S.A. The engineers from the collaborators are guiding our project on a continuous basis with an objective to commission the project by end of 1986. On the project being commissioned, the Company will be producing this product for the first time in the country The Company would thereby substantially save Foreign Exchange by way of import substitution as a part of a package of projects taken up for 'import substitution'. 6.2.2 Mono Ethylene Glycol (MEG) Project As you are aware, the Company proposes to set up a project for manufacture of Mono Ethylene Glycol (MEG), a vital raw material required for the Polyester Industry, with a licenced capacity of 40,000 tonnes per annum. The Company has taken suitable steps for implementing this project. 12 6.3 Detergent Intermediates Division 6.3.1 Linear Alkyl Benzene (LAB) Project As a part of the diversification programme, the Company has initiated first of such projects, viz. LAB for the manufacture of 50,000 tonnes per annum of raw material required for the manufacture of Synthetic Detergents. Presently there is an estimated demand for this product at 1,40,000 tonnes per annum. This is expected to improve upon the projected increase in the manufacture of Synthetic Detergents which has been accepted as a superior washing material to conventional soaps. This project is being set up in technical collaboration with UOP Processes International Inc., U.S.A. The Company has already taken adequate steps to speedily effect the commissioning of this project. 6.4 Plastics Division The Company has received Letters of Intent for manufacture of High Density Polyethylene (HDPE) of 50,000 tonnes per annum and Poly Vinyl Chloride (PVC) of 1,00,000 tonnes per annum. These projects are proposed to be set up at Hazira, in the State of Gujarat. The Company is taking effective steps to implement these proposals. 7. Chemicals and Plastics Division of Union Carbide (India) Limited On account of delays in obtaining various approvals for the takeover of the assets of the Chemicals and Plastics Division of Union Carbide (India) Limited, situated at Anik Chembur, Bombay, the Company called off that proposal with the consent of Union Carbide (India,) Limited. 8. Subsidiary Company Devti Fabrics Limited, a Company incorporated earlier, has become the Subsidiary of the Company on 30th September, 1985 and has taken over the running business of the Sidhpur Unit with effect from 1st October, 1985. In compliance with the provisions of Section 212 of the Companies Act, 1956, the audited Statement of Accounts along with the Directors' Report of Devti Fabrics Limited for the year ended 30th September, 1985, are annexed. 9. Research and Development The Research and Development wing of the Company at Ahmedabad has worked on different projects such as Catalytic Fading of Disperse Dyes, Discharge/Resist Printing on Polyester and its blends, behaviour of Disperse Dyes during High Temperature Fixation and Acretic Size Recovery to reduce load on effluent. At Patalganga, the Research and Development Division laid special emphasis for conservation of energy. It also worked on programmes for development of products such as octalobal yarn, trilobal yarn and flat yarn. A sum of Rs. 1.10 ($ 0.09) million has been spent towards capital expenditure during the year making the total capital expenditure to Rs. 26.60 ($ 2.19) million so far on Research and Development facilities. A revenue expenditure of Rs. 10.70 ($0.88) million has also been incurred during the year under review on research. and development. These amounts have been reflected under various heads in the Annual Accounts. 14 10. Insurance All the properties and insurable interest of the Company including buildings, plant and machinery, stocks, wherever necessary and to the extent required, have been adequately insured. 11. Fixed Deposits The Company's Fixed Deposit Scheme. inter alia, providing for acceptance of deposits under Cash Certificate Scheme, continues to enjoy support of the investing public. Deposits of Rs. 1.60 ($ 0.13) million which became due for repayment on or before, 31st December, 1985 were not claimed by the depositors as on that date. Of these, deposits of Rs. 0.70 ($ 0.06) million have been repaid/renewed. 12. Personnel Information as per sub-section (2-A) of Section 217 of the Companies Act, 1956 .read with the Companies (Particulars of Employees) Rules, 1975 forming part of the Directors' Report for the year ended 31st December, 1985 is annexed. 13. Directors Shri R. L. Meswani, an Executive Director expired on 30th August, 1985. No.. words; can match the warmth of his presence in office. his pleasing manners, dexterity and above all, the dedicated support he gave to the Company. With profound grief, the Directors put on record the invaluable services rendered by late Shri R. L. Meswani from the inception of the Company as a Founder Director. The Industrial Credit and Investment Corporation of India Limited has nominated Shri V. V. Divecha in place of their earlier nominee Shri R. R. Hirway who expired in May 1985. General Insurance Corporation of India Limited has also nominated Shri R. V. Madhava Rao in place of their earlier nominee Shri K. S. Shenoy. The Board of Directors have placed on record their grateful appreciation for the invaluable contributions made by the aforesaid Directors during their tenure as Directors in the Company. Shri N. H. Ambani, Shri A. D. Ambani and Shri M. D. Ambani, Executive Directors of the Company, retire by rotation as required by the Companies Act, 1956 and as per the provisions in the Articles of Association of the Company and are eligible for re-appointment. 14. Auditors Messrs. Rajendra & Company and Messrs. Chaturvedi & Shah, Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. The Company has received certificates from these Auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1) of the Companies Act. 1956. Shri Rajendra J. Shah, Proprietor of Messrs. Rajendra & Company, Chartered Accountants and a joint Auditor of the Company is a relative of Shri Jayantilal R. Shah, a Director of the Company. Your attention is, therefore, invited to the Explanatory Statement to item No. 7 annexed to the Notice convening the 12th Annual General Meeting. 18 The Notes to the Accounts Nos. 8 and 14 referred to' in the Auditors' Report are self-explanatory and therefore do not call for any further comments. 15. Cost Auditor The Central Government has directed that an audit of the cost accounts maintained by the Company for the year ended 31st December 1985 relating to the manufacturing activities at-Sidhpur be carried out. Pursuant to Section 233-B of the Companies Act, 1956, Shri Kaushik K. Shah, a practising Cost Account a was appointed as Cost Auditor to conduct the cost audit., 16. Appreciation Your Directors' acknowledge with. gratitude' the co-operation and assistance given by the Financial Institutions,. Banks and Investors during the year under review. Your Directors wish to place on record their deep sense of appreciation of the devoted services rendered by executives, staff and workers of the Company for its success For and on behalf of the Board R. H. AMBANI Joint Managing Director Bombay Dated: 4th April, 1986 M. L. BHAKTA Director 20 BALANCE SHEET AS AT 31ST DECEMBER, 1985 1985 (in Million) 1984 SOURCES OF FUNDS: Shareholders' Funds: Capital Reserves and Surplus Loan Funds: Secured Loans Unsecured Loans Total APPLICATION OF FUNDS: Fixed Assets: Gross Block Less: Depreciation Net Block Investments Schedule Rs. $ Rs. $ Rs. 1 $ Rs. S ‘A’ ‘B' ‘C’ ‘D’ ‘E’ ‘F’ 574.09 2537.08 47.19 208.55 5537.40 819.05 455.17 67.33 519.80 1944.11 41.64 155.72 3111.17 255.74 2463.91 197. 36 1992.28 448.28 159.58 35.91 6356.45 9467.62 522.50 778.24 2440.56 4904.47 195.49 392.85 7356.86 1288.77 604.74 105.94 5309.29 1046.44 425.27 83.82 6068.09 372.98 498.80 30.66 4262.85 1.70 341.45 0. 14 Current Assets, Loans and Advances: Current Assets: Inventories Sundry Debtors Cash and Bank Balances Other Current Assets `G' Loans and Advances `H' Less: Current Liabilities and Provisions: `I' Liabilities Provisions Total Notes and Contingent Liabilities ‘N’ 1475.86 1094.12 1263.48 4.58 3838.04 182.92 4020.96 121.32 89.94 103.86 0.37 315.49 15.03 330.52 735.54 258.87 994.41 60.46 21.28 81.74 1277.59 917.15 90.05 1.87 2286.66 67.40 2354.06 102.34 73.46 7.21 0.15 183.16 5.40 188.56 1548.48 165.66 1714.14 124.03 13.27 137.30 3026.55 248.78 9467.62 778.24 639.92 4904.47 51.26 392.85 As per our Report of even date For RAJENDRA & CO. Chartered Accountants For CHATURVEDI & SHAH Chartered Accountants For and on behalf of the Board R. H. AMBANI Joint Managing Director R. J. SHAH Proprietor D. CHATURVEDI Partner BOMBAY, Dated: 4th April, 1986. 22 K. GOPAL RAO J. R. SHAH M. L. BHAKTA V. V. DIVECHA N. H. AMBANI M. D. AMBANI A. D. AMBANI Directors Executive Directors V. M. AMBANI Secretary PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER, 1985 INCOME: Sales (Net) Other Income Increase/Decrease in stocks EXPENDITURE: Purchases Manufacturing and other expenses Interest Depreciation Schedule ‘J’ ‘K’ ‘L’ ‘M’ Rs. 7113.50 49.39 135.00 532.53 5432.92 244.47 374.60 $ 584.73 4.06 11.10 43.77 446.59 20.10 30.79 Reliance (In million) 1984 Rs. $ 1985 Rs. $ Rs. 6042.74 71.11 (–)92.89 $ 484.02 5.70 (–)7.44 7297.89 599.89 6020.96 482.28 586.93 4255.15 226.16 341.73 47.01 340.84 18.12 27.37 6584.52 713.37 149.09 541.25 58.64 12.25 –– –– –– 862.46 81.28 781.18 –– 70.89 6.68 64.21 5409.97 610.99 21.23 433.34 48.94 1.70 3.04 0.24 –– 635.26 –– 50.88 –– –– 635.26 50.88 0.51 100.00 0.04 8.22 228.00 18.74 8.58 248.94 50.00 0.71 20.46 4.11 –– –– –– –– 291.50 23.35 7.76 154.41 32.50 0.62 12.37 2.60 636.03 145.15 52.28 11.93 486.17 149.09 38.94 11.94 Profit for the year Balance as per last Balance Sheet Transfer from Investment Allowance, (Utilised) Reserve Excess Provision for Directors' Remuneration (Rs. 42,493) ($ 3493) (Previous Year Rs. Nil) ($ Nil) written back Less: Net effect of reversal of capitalisation of Interest on Fixed Assets (Refer Note No. 14 of Schedule 'N'). APPROPRIATIONS: Differential Dividend pertaining to Previous Year Transfer to Taxation Reserve (Refer Note No. 15 of Schedule N) Transfer to Investment Allowance Reserve Proposed Dividend (subject to 'tax) on: Preference Shares Equity Shares Transfer to General Reserve Balance carried to Balance Sheet Notes and Contingent Liabilities ‘N’ As per our Report of even date For RAJENDRA & CO. Chartered Accountants For CHATURVEDI & SHAH Chartered Accountants For and on behalf of the Board R. H. AMBANI Joint Managing Director R. J. SHAH Proprietor D. CHATURVEDI Partner BOMBAY, Dated: 4th April, 1986. K. GOPAL RAO J. R. SHAH M. L. BHAKTA V. V. DIVECHA N. H. AMBANI M. D. AMBANI A. D. AMBANI Directors Executive Directors V. M. AMBANI Secretary 23 Schedule -`A' forming part of the Balance Sheet SHARE CAPITAL Authorised: 7,50,00,000 Equity Shares of Rs. 10/- ($ 0.82) each 30,000 11% Cumulative Redeemable Preference Shares of Rs,. 100/- ($ 8.22) each 5,50,000 15% Cumulative Redeemable Preference Shares of Rs. 100/- ($ 8.22) each 4,20,000 Cumulative Redeemable Preference Shares of Rs. 100/- ($ 8.22) each 1985 $ Rs. (in million) 1984 $ Rs. 750.00 61.65 750.00 60.07 3.00 0.25 3.00 0.24 55.00 4.52 55.00 4.41 42.00 3.45 42.00 850.00 69.87 850.00 3.36 68.08 Issued & Subscribed: 5,16.09,318 Equity Shares of Rs. 10/- ($ 0.82) each fully paid-up 516.09 42.42 461.35 36.95 30,000 11% Cumulative Redeemable Preference Shares of Rs. 100/- ($ 8.22) each fully paid-up (Redeemable at any time after 16th March 1990 but not later than 15th March 1993) 5,50,000 15% Cumulative Redeemable Preference Shares of Rs. 100/- ($ 8.22) each fully paid-up (Redeemable at any time after 31st December 1994 but not later than 31st December 1997) Equity Shares of Rs. 10/- ($ 0.82) each fully paid up (45,005 Equity Shares of Previous Year pending allotment on account of consolidation of fractional coupons 3.00 0.25 3.00 0.24 55.00 4.52 55.00 4.41 –– –– 0.45 0.04 574.09 47.19 519.80 41.64 Of the above Equity Shares: (1) (a) 1,56,62,923 Shares were allotted as fully paid-up Bonus shares by capitalisation of Share Premium and Reserves. (b) 60,33,372 Shares were allotted as fully paid-up pursuant to Schemes of Amalgamation, without payments being received in cash. (c) 1,6 7,12,278 Shares were allotted as fully paid-up shares on conversion of Debentures and Term Loans. (d) 1,01,24,675 Shares were issued in lieu of surrender of non-convertible portion of Debentures of Series 1, 11, Ill and IV. (c) 44,941 Shares (including shares by way of Bonus) are reserved for allotment to some of the shareholders/purported transferees of Shares of erstwhile Sidhpur Mills Company Limited (hereinafter referred as 'SMCL') pending necessary approval of the concerned authorities/Gujarat High Court. (2) The Company will be required to issue and allot additional 18,667 Equity Shares of Rs. 10/- ($ 0.82) each at a premium of Rs. 15/- ($ 1.23) per share to the shareholders of erstwhile 'SMCL' as Right shares if the High Court of Bombay so decides.. 24 Schedule -`B’ forming part of the Balance Sheet RESERVES AND SURPLUS: Capital Reserve : As per last Balance Sheet Less: Adjusted against Goodwill Account $ Rs. 1985 $ 0.03 0.03 Rs. 0.34 0.34 Rs. 0.34 –– Reliance (In million) $ Rs. 1984 $ 0.03 –– Share Premium Account: As per last Balance Sheet Add: Additions during the year : On Conversion of Debentures of 'E' Series On Surrender of Debentures (Refer Note No. 13 of Schedule W) Development Rebate Reserve: As per last Balance Sheet Less: Transferred to General Reserve Investment Allowance Reserve. As per last Balance Sheet Less: Utilised for purchase of Machinery during the year -transferred to Investment Allowance (Utilised) Reserve –– –– 0.34 0.03 624.80 51.36 213.33 5.92 17.53 0.49 8.77 0.70 –– 616.03 –– 49.34 844.05 69.38 624.80 50.04 0.96 0.96 0.08 0.08 2.79 1.83 0.22 0.14 –– –– 0.96 0.08 291.50 23.96 277.50 22.23 291.50 23.96 –– –– 277.50 22.23 –– –– 291.50 23.35 228.00 18.74 291.50 23.35 Add: Transferred from Profit and loss Account 228.00 18.74 Investment Allowance (Utilised) Reserve: As per last Balance Sheet Add: Transferred from Investment Allowance Reserve less: Transferred to Profit and Loss Account (in respect of assets sold within the prescribed period) Taxation Reserve: Transferred from Profit and Loss Account General Reserve: As per last Balance Sheet Add: Amount transferred from: Development Rebate Reserve Profit and Loss Account Profit and Loss Account 539.98 44.39 291.50 831.48 23.96 68.35 265.52 21.27 277.50 543.02 22.23 43.50 –– –– 3.04 0.25 831.48 68.35 539.98 43.25 100.00 8.22 –– –– 337.44 27.74 303.11 24.28 0.96 50.00 0.08 4.11 1.83 32.50 0.15 2.60 388.40 145.15 31.93 11.93 2537.08 208.55 337.44 149.09 27.03 11.94 1944.11 155.72 25 Schedule -`C' Forming part of the Balance Sheet SECURED LOANS 1985 (In million) 1984 A. Working Capital Loans: From Banks B. Working Capital Term Loans: From a Bank C. Debentures: i) 11% Privately-placed Debentures of Rs. 1000/- ($ 82.2) each fully paid Less: Converted/Redeemed ii) 11% Privately-placed Debentures of Rs. 1000/- ($ 82.2) each fully paid Less: Converted/Redeemed iii) 11% Convertible Mortgage Debentures of Rs. 500/- ($ 4 1. 1) each fully paid (Series-I) Balance amount is redeemable at par in five, annual instalments between 25th October, 1987 and 25th October 1991 Less: Converted/Surrendered' iv) 12% Convertible Mortgage Debentures of. Rs. 125/- ($ 10.27) each fully paid (Series 11) Balance amount is redeemable at par in five annual instalments between 14th November, 1988 and 14th November 1992 Less: Converted/Surrendered Rs. $ Rs. $ Rs. $ Rs. $ 380.04 31.24 285.09 22.84 5.74 0.47 17.07 1.36 3.50 3.50 –– 5.50 5.50 –– 0.29 0.29 –– 0.45 0.45 –– 3.50 2.80 0.70 5.50 3.38 2.12 0.28 0.22 0.06 0.44 0.27 0.17 70.00 68.93 1.07 5.76 5.67 0.09 70.00 68.38 1.62 5.61 5.48 0.13 108.00 106.88 1.12 8.88 8.79 0.09 108.00 106.21 1.79 8.65 8.51 0.14 v) 13.5% Convertible Mortgage Debentures of Rs. 125/- ($ 10.27) each fully paid (Series 111) Balance amount is redeemable at par in four annual instalments between 23rd June 1990 and 23rd June, 1993 Less: Converted/Surrendered Carried forward 26 240.00 234.89 5.11 7.30 19.73 19.31 0.42 240.00 232.64 7.36 19.22 18.63 0.59 0.60 385.78 31.71 13.59 1.09 302.16 24.20 Schedule -'C' (Contd.) Rs. $ Rs. 1985 $ Rs. $ Rs. Reliance (In million) 1984 $ Brought forward 7.30 0.60 385.78 31.71 13.59 1.09 302.16 24.20 vi) 13.5% Convertible Secured Debentures of Rs. 125/- ($ 10.27) each, fully paid (Series-IV). Balance amount is redeemable at par at the end of 15th June 1994 with an option to repay these amounts in one or more instalments by drawing lots at any time after the end of 15th June 1991 Less: Converted/Surrendered vii) 13.5% Convertible Secured Debentures of Rs. 150/- ($ 12.33) each, fully paid (Series 'E') Balance amount is redeemable at par at the end of 10th December 1996 with an option to repay these amounts in one or more instalments by drawing lots at any time after the end of 10th December 1993. Less: Converted viii) 15% Non-Convertible Secured Debentures of Rs. 100/- ($ 8.22) each (Series `F') (Refer Note No. 7 below) 500.00 495.50 4.50 41.10 40.73 0.37 500.00 492.08 7.92 40.05 39.42 0.63 800.00 266.67 533.33 65.76 21.92 43.84 800.00 –– 800.00 64.08 –– 64.08 2700.00 221.94 –– –– 3245.13* 266.75 821.51 65.8.0 *Includes Debentures of Rs. 0.70 ($ 0.06) million held by Directors D. TERM LOANS: From Banks: 1. (a) Foreign Exchange Loan in Euro-Currency at floating rate (b) Loan from State Bank of India, New York, Exim Bank U.S.A. Line of Credit, Private Export Funding Corporation of U.S.A. and Sanva Bank Ltd., Tokyo, Japan- (c) Rupee Loans Carried forward 617.18 50.73 222.16 17.80 199.70 27.84 844.72 844.72 16.41 2.29 69.43 264.33 38.67 525.16 21.17 3.10 42.07 69.43 3630.91 298.46 525.16 42.07 1123.67 90.00 27 Schedule -‘C' (Contd.) Rs. $ Rs. 1985 $ Rs. $ Rs. 1984 $ (In million) Brought forward 844.72 69.43 3630.91 298.46 525.16 42.07 1123.67 96.00 From Financial Institutions: 2. (a) Foreign Currency Loans (b) Rupee Loans From Others: 3. (a) Lazard Brothers & Co. Ltd., London (b) Housing Development Finance Corporation Ltd. E. F. BRIDGE LOANS: 1. 2. From a Financial Institutions From Housing Development Finance Corporation Limited DEFERRED PAYMENT LIABILITIES To Foreign Machinery Suppliers (Guaranteed by Banks and a Financial Institution) NOTES: Of the above: 960.18 18.23 978.41 16.95 6.19 23.14 –– –– 78.93 1.50 80.43 1.39 0.51 1.90 –– –– 1846.27 151.76 200.48 21.91 222.39 28.64 –– 28.64 11.90 4.00 16.06 1.76 17.82 2.29 –– 2.29 0.95 0.32 776.19 62.18 –– –– 15.90 1.27 60.22 4.95 5537.40 455.17 76.52 6.13 1992.28 159.58 1. Working Capital Loans from Banks are secured against hypothecation of present and future stock of raw materials, stock-in-process, finished goods. spares and stores, book debts, outstanding monies and receivable claims. 2. Working Capital Term Loans represent working capital facilities originally granted by Bank of Baroda to the Sidhpur Mills Company Limited (amalgamated with the Company). In terms of the Scheme of Amalgamation. a portion of the said facilities to the extent not covered by securities for Working Capital Loans is to be converted into Term Loans, amount whereof is to he determined. Amount of the said Term Loan is to be secured by way of large on the Fixed Assets situate at Sidhpur in the state of Gujarat. 3. (a) Debentures referred to in C(iii) are secured by mortgage of deposit of title deeds on the properties both situate at Baroda, District Ahmedabad. in the state of Gujarat and Patalganga, District Raigad, in the state of Maharashtra. (b) (c) Debentures referred to in C(iv), (vi) and (viii) and Term Loans referred to in D(1)(c) to the extent of Rs. 3.16 ($ 0.26) million. D(2)(a) to the extent of Rs. 5.13 ($ 0.42) million and D(2)(b) to the extent of Rs. 18.23 ($ 1.50) million, are secured by legal mortgage in English form on the properties situate at Naroda, District Ahmedabad in the state of Gujarat and mortgage by deposit of title deeds on the properties at Patalganga. District Raigad, in the state of Maharashtra. Debentures referred in C(vii) are secured by legal mortgage in English form on the properties situate at Naroda. District Ahmedabad. in the state of Gujarat. These Debentures alongwith cumulative interest payable on the debentures referred to in C(viii) shall rank subsequent to the charges created/to be created by the Company in favour of: (I) Trustee/Agents and Trustees for the holders of Debentures referred to in C(iii), C(iv), C(v) C(vi) and C(viii) and (ii) Other financial institutions/banks for their outstanding loans/guarantees and shall rank. pari passu with the Debentures referred in C(viii). 4. Debentures referred in CM, Term Loans referred in D(1)(a) to the extent of Rs. 432.56 ($ 3.55) million, D(1)(b), D(1)(c) to the extent of Rs. 18,75 ($ 1.54) million, D(2)(a) to the extent of Rs. 955,05 ($ 78,50) million, D(3)(a)), and deferred payment liabilities in F are secured by deposit of title deeds on the properties situate at Patalganga, District Raigad in the state of Maharashtra and are to he secured on the properties at Naroda, District Ahmedabad in the state of Gujarat. 28 Reliance Schedule -‘C' (Contd.) 5. Term Loans referred in: (a) D(1)(a) to the extent of Rs. 184.62 ($ 15.17) million are secured exclusively by hypothecation of specific items of plant and machinery situate at Naroda and Patalganga. (b) D(1)(c) to the extent of Rs. 5.93 ($ 0.49) million are secured/to he secured by hypothecation of all moveable machinery including all stock and spare parts both present and future situate only at Sidhpur. The charges shall rank pari passu inter se with the charge referred in Note 2. (c) D(3)(b) are to be secured by a charge on the residential quarters situate at Panvel, District Raigad, in the state of Maharashtra. 6. The charges created/to be created on the Debentures, term loans, and deferred payment liabilities referred to in (c). (d) and (0 above would rank pari passu, inter se, save and except: (i) (ii) Debentures referred in C(vii) and cumulative interest payable on Debentures referred in C(viii) relating to cumulative interest payments scheme. Term loans referred in D(1)(a) D(1)(c) to the extent of Rs. 184.62 ($ 15.17) million and Rs. 5.93 ($ 0.49) million respectively subject to the prior charges on the current assets in favour of the Banks for working capital facility. (a) The Debentures referred in C(viii) above are redeemable at a premium of 5% of the face value of each Debenture. Of the aforesaid Debentures, the Debentures issued under non-cumulative interest payment scheme are redeemable on 30th September, 1992 and the Debentures issued under cumulative interest payment scheme are redeemable in three yearly instalments commencing from 30th September. 1992 by draw of lots. (b) The Company is required to buy back at par the said Debentures provided; (i) The face value of the total holding of the debentureholder in each case does not exceed Rs. 40,000 ($ 3,288) and (ii) The debentureholder has held the debentures for a period of not less than one year on the date of his offer. The Company can re-issue at par such bought-back debentures. (c) The Debentures referred in C(viii) includes, 97,47,320 Debentures reserved for allotment to non-resident Indians since permission received subsequently. Schedule -`D’ forming part of the Balance Sheet UNSECURED LOANS Fixed Deposits [Including Cash Certificates of Rs. 115.62 ($ 9.50) million] From Unit Trust of India Advance against debentures to be privately placed with Unit Trust of India, pending approval of concerned Authorities From Scheduled Banks Overdrawn balance in Current Accounts (As per Books of Accounts) *Includes deposits of Rs. 235.50 ($ 19.36) million, repayable within one year. 1985 Rs. $ Rs. (In million) 1984 $ 697.92 * 57.37 * 446.95 35.80 121.13 9.96 –– –– –– –– 1.33 0.11 819.05 67.33 448.28 35.91 29 Schedule -‘E' forming part of the Balance Sheet FIXED ASSETS (In million) NATURE OF FIXED ASSETS GROSS BLOCK (AT COST) DEPRECIATION NET BLOCK Goodwill Leasehold Land Freehold land Buildings Railway Siding Plant &.Machinery Electric Installation Factory Equipments Furniture & Fixtures Vehicles Capital Expenditure pending allocation and advance against Capital Expenditure Previous Year NOTES: Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ Rs. $ As at 1.1.85 12.62 1.04 31.78 2.61 1.15 0.10 416.66 34.25 0.05 0.01 4547.71 373.82 70.56 5.80 33.28 2.74 73.53 6.04 13.52 1.11 108.43 8.91 5309.29 436.43 4057.24 324.98 Additions/ transfers Deductions/ transfers As at 31.12.85 Total upto 31.12.85 As at 31.12.85 As at 31,12.84 –– –– 15.32 1.26 –– –– 144.57 11.88 –– –– 2042.75 167.91 106.96 8.79 7.03 0.58 23.34 1.92 7.32 0.60 1119.67 92.04 3466.96 1284.98 1935.81 155.06 0.34 0.03 –– –– –– –– 54.23 4.46 0.05 0.01 1245.45 102.37 7.11 0.58 1.41 0.12 0.46 0.04 1.91 0.15 108.43 8.91 1419.39 116.67 683.76 54.77 12.28 1.01 47.10 3.87 1.15 0.10 507.00 41.67 –– –– 5345.01 439.36 170.41 14.01 38.90 3.20 96.41 7.92 18.93 1.56 1119.67 92.04 7356.86 604.74 5309.29 425.27 –– –– –– –– –– –– 32.45 2.67 –– –– 1221.10 100.37 12.97 1.07 6.19 0.51 12.65 1.04 3.41 0.28 –– –– 1288.77 105.94 1046.44 83.82 12.28 1.01 47.10 3.87 1.15 0.10 474.55 39.00 –– –– 4123.91 338.99 157.44 12.94 32.71 2.69 83.76 6.88 15.52 1.28 1119.67 92.04 6068.09 498.80 4262.85 341.45 12.62 1.01 31.78 2.54 1.15 0.09 390.00 31.23 –– –– 3555.35 284.78 60.71 4.86 28.51 2.29 63.91 5.13 10.36 0.83 108,43 8.69 4262.85 341.45 (a) Leasehold Land includes Rs. 6.95 ($ 0.57) million in respect of which lease-deeds are pending execution. No write-off has been made in respect of lease-premium paid for leasehold land since the grant of lease is for a long period. (b) Buildings includes (i) under-construction Rs. 147.77 ($ 12.15) million and (ii) cost of ownership premises in Co-operative Societies Rs. 2.34 ($ 0.19) million. (c) Plant and Machinery includes (i) Rs. 1296.19 ($ 106.55) million under-installation and (ii) Rs. 44.71 ($ 3.67) million in-transit. (d) Electric instillation includes Rs 39.79 ($ 3.27) million under-installation. (c) (f) Factory Equipments includes Rs. 3.11 ($ 0.26) million under-instillation. Furniture and Fixtures includes Rs. 1.08 ($ 0.09) million against work-in-progress. (g) Capital Expenditure pending allocation consists Rs. 737.61 ($ 60.63) million on account of Advance against Capital expenditure [previous year Rs. 107.89 ($ 8.87) million) and Rs. 382.03 ($ 31.40) million on -account of pre-operative expenses as per Note No. 16 of Schedule ‘N’. (h) Depreciation is provided in -accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956. Depreciation in respect of Fixed Assets installed. and put to use during the year is charged on pro rata basis with reference to the period of use. (i) Deductions includes Rs. 1272.08 ($ 104.56) million on account of reversal of capitalisation of interest (Refer Note No. 14 of Schedule W) and Rs. 13.90 ($ 1.14) million on account of transfer/sale of certain assets to Devti Fabrics Limited, a wholly owned subsidiary of the Company. (j) Additions during the year includes assets -acquired of Rs. 1.07 ($ 0.09) million for Research and Development. 30 Schedule ‘F’ forming part of the Balance Sheet INVESTMENTS (AT COST) Rs. $ Rs. 1985 $ Rs. $ Rs. 1984 $ Reliance Government and Other Securities Quoted 3% Conversion Loan of 1946 - [face value Rs. 47,000 ($ 3,863.40) (Deposited with Central Excise Collectorate] Unquoted 7 Years National Savings Certificate (face value Rs. 20,100) ($ 1652.22) (Deposited with Central Excise Collectorate) 28,000 2,301.60 20,100 1,652.22 28,000 2,242.80 48,100 3,953.82 1,07,100 8,578.71 79,100 6,335.91 Trade Investments - Unquoted: 6 Equity Shares of New Piece Goods Bazar Co. Ltd. of Rs. 1000/- ($ 82.20) each, fully paid-up 5 Equity Shares of Bombay Gujarat Art Silk Vepari Mahajan Co-operative Shops & Warehouses Society Ltd. of Rs. 200/- ($ 16.44) each, fully paid up 165 Shares of The Art Silk Co-operative. Limited of Rs. 100/- ($ 8.22) each fully paid-up 225 Shares of Crimpers Industrial Co-operative Society Limited of Rs. 100/- ($ 8.22) each, Rs. 25/- ($ 2.05) per share paid-up 20 Shares of the Bombay Market Art Silk Co-operative (Shops and Warehouses) Society Ltd., of Rs. 200/ ($ 16.44) each, fully paid-up 4,980 Shares of Hindustan Oil Exploration Co. Ltd. of Rs. 100/- ($ 8.22) each, fully paid-up In Subsidiary Company (Body Corporate under the same Management) 2,10,070 Equity Shares of Devti Fabrics Limited, of Rs. 10/- ($ 0.82) each, fully paid-up Carried forward 17,000 1,397.40 17,000 1,361.70 1,000 82.20 1,000 80.10 16,500 1,356.30 16,500 1,321.65 5,625 462.38 5,625 450.56 4,000 328.80 4,000 320.40 4,98,000 40,935.60 5,42,125 44,562.68 5,42,125 43,424.21 4 98,000 39,889.80 21,00,700 1,72,677.54 26,90,925 2,21,194.04 6,49,225 52,002,92 31 Schedule -‘F' (Contd.) INVESTMENTS (AT COST) Brought forward Rs. $ Rs. 26,90,925 $ 2,21,194.04 1985 Rs. 1984 $ Rs. $ 6,49,225 52,002.92 Other Investments. (i) In Shares Quoted: 5,000 Equity Shares of Housing Development Finance Corporation Ltd. of Rs. 100/- ($ 8.22) each, fully paid-up 1,000 Equity Shares of Air Control & Chemicals Engineering Co. Ltd., of Rs. 100/- ($ 8.22) each, fully paid-up 55,000 3.332 Equity Shares of The Industrial Credit & Investment Corporation of India Ltd., of Rs. 100/- ($ 8.22) each, fully paid-up 3,33,200 5,00,000 41,100.00 4,521.00 27,389.04 5,00,000 40.050.00 55,000 4.405.50 8,88,200 73,010.04 5,55,000 44,455.50 –– –– (ii) In Units Unquoted : 2,82,50.000 Units of Unit Trust of India of Rs. 10/- ($ 0.82) each (iii) In Debentures Quoted: 1,666 14% Unsecured Convertible Debentures of The Industrial Credit & Investment Corporation of India Ltd. of Rs. 100/- ($ 8.22) each, fully paid-up 36,92,32,911 3,03,50,945.28 1,66,600 13,694.52 37,29,78,636 3,06,58,843.88 Aggregate Value of 1985 4,99,800 40,033.90 17,04,025 1,36,49 (In million) 1984 Quoted Investments Unquoted Investments Book Value Market Value Book Value Market Value Rs. $ Rs. $ Rs. $ RS. $ 1.08 0.09 0.96 0.08 371.90 30.57 –– –– 1.08 0.62 0.09 0.05 0.96 0.08 –– –– During the year, the Company purchased 4,84,00,000 Units [face value Rs. 10/- ($ 0.82) each] of Unit Trust of India for Rs, 632.56 ($ 52.00) million and sold 2,01,50,000 Units for Rs. 275.68 ($ 22.66) million. The Company also purchased 8% Loan 2011 of Government of India -and 11.5% Central Loan 2015 for Rs. 150.17 ($ 12.34) million. and Rs. 49.72 ($ 4.09) million respectively and has sold the same for Rs. 150.70 ($ 12.39) million and Rs. 49.89 ($ 4.10) million respectively. 32 Schedule -‘G’ forming part of the Balance Sheet CURRENT ASSETS 1985 Reliance (in million) 1984 Inventories (at cost-except otherwise stated) (Certified and valued by the Management) Stores, Spares, Dyes, Chemicals, etc. Raw Materials Stock-in-transit Stock-in-process Finished Goods Others [includes de-commissioned machinery Rs. 0.59 ($ 0.05) million at written-down value and Trial-run stock of Rs. 0.51 ($ 0.04) million at the net estimated realisable value] Sundry Debtors (Unsecured) Over Six months: Considered good Considered doubtful Less: Provision for doubtful debts Others, considered good Cash and Bank Balances Cash on hand Rs. $ Rs. $ Rs. $ Rs. 5 161.40 506.49 0.66 406.51 368.29 13.27 41.63 0.06 33.42 30.27 119.84 469.49 15.74 341.44 329.57 9.60 37.61 1.26 27.35 26.40 32.51 2.67 1.51 0.12 1475.86 121.32 1277.59 102.34 88.60 16.85 105.45 16.85 88.60 1005.52 7.28 1.39 8.67 1.39 7.28 82.66 95.86 10.37 106.23 10.37 95.86 821.29 7.68 0.83 8.51 0.83 7.68 65.78 1094.12 89.94 917.15 73.46 2.65 0.22 1.74 0.14 Balances with Scheduled Banks: In current accounts [includes excess Share and Debenture application monies refundable-Rs. 1.81 ($ 0.15) million] In Fixed Deposit Accounts [includes Rs. 0.25 ($ 0.02) million lodged with Central Excise Authorities and Rs. 0.20 ($ 0.02) million endorsed in favour of the Bankers) 1222.75 Cost of Import Entitlements: (Under Export Promotion Scheme) 38.08 3.13 73.51 5:89 100.51 14.80 1.18 1263.48 103.86 4.58 0.37 90.05 7.21 1.87 0.15 3838.04 315.49 2286.66 183.16 33 Schedule -‘H’ forming part of the Balance Sheet LOANS & ADVANCES Unsecured.- Considered Good Advances to a wholly owned subsidiary Company - Devti Fabrics Limited [maximum balance during the year Rs. 10.02 ($ 0.82) million] Advances recoverable in cash or in kind or for value to be received [includes Rs. 0.12 ~$ 0.01) million from Officers- maximum balance during the year Rs. 0.15 ($ 0.01) million] Deposits [including Rs. 8,550/- ($ 703) with a firm in which some of the Directors are interested as Partners-amount since recovered Prepaid Expenses Balances with Customs, Central Excise Authorities, etc. *Excluding Rs. 1.66 ($ 0.14) million considered doubtful and provided for Schedule - ‘I’ forming part of the Balance Sheet CURRENT LIABILITIES & PROVISIONS 1985 (in million) 1985 1984 Rs. $ Rs. $ 10.02 0.82 –– –– 86.71 * 7.12 * 33.56 2.69 62.38 3.00 20.81 5.13 0.25 1.71 182.92 15.03 23.16 2.44 8.24 67.40 1.86 0.19 0.66 5.40 (In million) 1984 Rs. $ Rs. $ Rs. $ Rs. $ 17.81 388.73 8.81 318.38 * 1.46 31.96 0.72 26.17 * 14.72 355.05 6.84 1158.86 1.18 28.44 0.55 92.82 1.81 0.15 13.01 1.04 735.54 60.46 1548.48 124.03 1.35 257.52 0.11 21.17 3.49 162.17 0.28 12.99 258.87 994.41 21.28 81.74 165.66 13.27 1714.14 137.30 Current Liabilities: Sundry Deposits Sundry Creditors Unclaimed Dividends Interest accrued but not due on Loans [Previous year Rs. 145.33 ($ 11.95) million] Excess Share and Debenture Application Monies refundable Provisions: Gratuity and Superannuation Funds Proposed Dividends *Payable within one year 34 Schedule - ‘J’ forming part of the Profit and Loss Account OTHER INCOME Incentives, Assistance & Drawbacks on Exports received Processing Charges Dividend (Gross) On Other Investments Tax at source Rs. 14,850 ($ 1221) Profit on sale/discard of Assets (Net) Miscellaneous Income Profit on sale of Investments Schedule -‘K’ forming part of the Profit and Loss Account Reliance (In million) 1985 1984 $ Rs. IS, 0.50 –– 5.48 29.19 0.01 –– 3.45 0.10 4.06 0.06 1.16 35.22 –– 71.11 0.44 2.34 0.01 0.09 2.82 –– 5.70 Rs. 6.05 –– 0.07 –– 41.97 1.30 49.39 (In million) INCREASE IN STOCKS 1985 1984 Rs. $ Rs. $ Rs. $ Rs. $ Stock-in-Trade (at close): Finished Goods Stock-in-process Others Stock-in-Trade (at commencement): Finished goods Stock-in-process By-product Others 368.30 406.51 31.40 30.27 33.42 2.58 329.57 341.44 –– 0.20 27.09 28.06 –– 0.02 329.57 341.44 0.20 26.40 27.35 0.01 806.21 66.27 671.21 53.76 409.38 353.44 0.14 0.54 32.79 28.31 0.06 0.04 671.21 55.17 135.00 11.10 764.10 61.20 (-)92.89 (-)7.44 35 Schedule -‘L’ forming part of the Profit and Loss Account MANUFACTURING & OTHER EXPENSES 1985 Rs. $ Rs. $ Rs. $ Rs. 1984 $ (In million) Raw Materials Consumed: Stock at commencement Add : Purchases Less : Stock at close 469.49 2271.09 2740.58 506.49 Manufacturing Expenses: Carriage Inward Stores & Spare parts consumed Dyes & Chemicals Electric Power, Fuel & Water Machinery Repairs Building Repairs Labour, Processing & Machinery Hire Charges Excise Duty on Yarn 18.81 83.72 173.85 244.99 9.72 4.90 78.03 1970.18 38.59 186.68 225.27 41.63 1.55 6.88 14.29 20.14 0.80 0.40 6.41 161.95 2234.09 183.64 1619.43 129.72 284.01 1804.91 2088.92 469.49 15.04 70.84 148.96 191.06 6.54 3.97 67.19 1575.35 22.75 144.57 167.32 37.60 1.20 5.67 11.93 15.31 0.52 0.32 5.38 126.19 Payments to & Provision for Employees: Salaries, Wages & Bonus Contribution to Provident Fund, Gratuity Fund, Superannuation Fund, Employees' State Insurance Scheme, Pension Scheme, Labour Welfare Fund, etc. Employees' Welfare and Other Amenities Sales & Distribution Expenses: Samples, Sales Promotion & Advertisement Expenses Brokerage & Commission Export Expenses Packing Expenses Warehousing Charges Freight & Forwarding Charges Establishment Expenses: Insurance Rent Rates & Taxes Other Repairs Travelling Expenses [including Rs. 1.70 ($0.14) million for Directors] Payments to auditors Directors' Fees General Expenses Provision for doubtful recoveries Charity & Donation Loss on Sale/Discard of Assets 2584.20 212.42 2078.95 166.52 144.26 11.86 142.13 11.38 21.47 26.92 1.77 2.21 17.13 19.04 1.37 1.53 192.65 15.84 178.30 14.28 26.13 46.84 0.08 116.24 7.00 24.14 16.87 4.28 1.64 6.37 13.43 1.47 0.01 140.65 6.48 5.76 4.59 2.15 3.85 0.01 9.55 0.57 1.99 1.39 0.35 0.14 0.52 1.10 0.12 –– 11.56 0.53 0.48 0.38 220.43 18.12 36.41 38.96 0.14 109.49 3.43 26.36 13.16 3.90 0.78 4.67 9.68 0.84 0.01 123.48 2.91 4.25 –– 2.92 3.12 0.01 8.77 0.27 2.11 1.06 0.31 0.06 0.38 0.78 0.07 –– 9.89 0.23 0.34 –– 214.79 17.20 201.55 16.57 5432.92 446.59 163.68 13.12 4255.15 340.84 36 Schedule -‘M’ forming part of the Profit & Loss Account INTEREST Debentures Fixed Loans Others (Net) Reliance (In million) 1985 $ 5.57 14.28 0.25 Rs. 26.62 119.23 80.31 1984 $ 2.13 9.55 6.44 Rs. 67.76 173.74 2.97 244.47 20.10 226.16 18.12 Schedule -‘N’ forming part of the Profit & Loss Account and Balance Sheet NOTES AND CONTINGENT LIABILITIES 1. 2. The previous year's figures have been regrouped wherever necessary. Opening balances (in dollars) do not necessarily tally with the closing balances of the previous year in the similar accounts. The same is due to differences in the Rs./$ exchange rate during this year as compared to those in the previous year. 1985 ...$ 8.22 = Rs. 100/- The exchange rates are as follows: 1984... $ 8.01 = Rs. 100/- Interest on overdue bills and delayed payment charges on loans The Company is accounting the following on cash basis: Export incentives and other claims 3. (a) (b) Claims for refunds of custom duty, sales tax, insurance, octroi etc. (c) (d) Drawback on return of cops Income on investments (c) Excise Duty set off (f) Performance incentives on sales (g) Liability in respect of maturity value in excess of initial investment of Cash Certificates issued by the Company under (h) Fixed Deposit Scheme. Premium on redemption of Debentures of Series `F' Interest -Others (Net) is arrived at after deducting Rs. 63.04 ($ 5.18) million [Tax at source Rs. 1.11 ($ 0.09) million] being Interest received/receivable. The figure of "Sales" has been arrived at after adjusting: (i) 4. (In million) Excise Duty Sales Tax Rs. 204.98 12.85 1985 $ 16.85 1.06 Rs. 172.47 4.98 1984 $ 13.81 0.40 Revenue expenses amounting to Rs. 10.71 ($ 0.88) million on Research and Development have been included under the respective heads of accounts. (a) (b) 6. 7. Auditors' Remuneration (In million) (a) Audit Fees (b) (c) (d) Out-of-pocket expenses Tax audit fees (includes Rs. 0,20 ($ 0.02) million for 19841 For certification and consultation in Finance and Tax matters 1985 $ 0.06 0.04 0.01 0.01 0.12 Rs. 0.70 0.52 0.18 0.07 1.47 Rs. 0.60 –– 0.17 0.07 0.84 1984 $ 0.05 –– 0.01 0.01 0.07 37 Schedule -‘N’ (contd.) NOTES & CONTINGENT LIABILITIES (Contd.) 8. The statement of accounts from the Official Liquidator of 'SMCL' from 1st January, 1981 to 31st December, 1985, has not been received till date. However, the Company carried out an inspection of the books of accounts of the Liquidator and obtained details-,. of receipts and payments made by him and has incorporated the same in the accounts of respective years. Necessary adjustments, if any, would be made upon receipt of final Statement of Accounts. 9. In terms of resolution passed by the shareholders at the Extraordinary General Meeting of the Company held on 24th January 1984, the Company has transferred/given on lease certain assets of the Company's undertaking at Sidhpur, as also assigned certain liabilities to Devti Fabrics Ltd., a Company incorporated with a view to take over the running business of Sidhpur Unit as a going concern. Devti Fabrics Limited became a subsidiary of the Company effective from 30th September, 1985. In view of the transfer of the said business with effect from 1st October, 1985, the previous year's figures to this extent are not comparable and no provision has been made for the cumulative losses of Rs. 14,250 ($ 117 1) of the said Subsidiary Company Accordingly, licensed and installed capacities pertaining to the said unit have been adjusted in accounts. 10. (a) The Company has been advised that the computation of net profit (for the purpose of calculation of Directors' remuneration under Section 349 of the Companies Act, 1956) need not be enumerated, since no commission has been paid to the Directors and only minimum remuneration has been paid to the Directors, as per the approval of the Central Government received under Section 198 and Section 309 of the Companies Act, 1956. Rs. 1985 $ Rs. 1984 $ (b) Managing Directors' and Executive Directors' Remuneration: (i) Salaries 2,58,300 21,232.26 3,00,100 24,038.01 (ii) Contribution to Provident Fund and Superannuation Fund 64,575 5,308.06 75,025 6,009.50 (iii) Provision for Gratuity (as per actuarial valuation) [Previous year Rs. 26,384 ($ 2113.36)] (iv) Perquisites 17,815 1,464.39 26,261 2,103.51 1,75,553 14,430.46 1,95,521 15,661.23 11. The Company has been providing liability for Excise Duty in respect of finished products lying in factory premises/bond as and when they are removed on the footing that duty becomes payable only at the time of removal of goods. Accordingly, estimated liability amounting to Rs. 173.60 ($ 14.27) million in respect of such products at year end has not been provided in the accounted, and not included in the inventory of finished products. 12. (a) Foreign Currency Loans availed of during the year to acquire plant and machinery have been accounted for in terms of Indian Rupees at the exchange rates prevailing on relevant dates. (b) No effect has been given in the Accounts to the fluctuations in rates of exchange on outstanding balance of foreign exchange (c) The Company has consistently been treating difference on account of fluctuations in exchange rates on payments of instalments' of loans, deferred credit facilities, etc. as a revenue expenditure and the same amounting to Rs. 33.88 ($ 2.78) million [Previous year Rs. 25.35 ($ 2.08) million has been included under the head "General Expenses". 13. In terms of the approval given by the Shareholders, Class Debentureholders and extensions obtained from Controller of Capital Issues, Government of India, the Company has issued during the year 96,316 Equity Shares of Rs. 10/- ($ 0.82) each credited as fully paid-up against Debentures of the value of Rs. 6.88 ($ 0.56) million of Series I, II, III and IV surrendered by the Debentureholders in the ratio of 1.4 Equity Shares of Rs. 10/- ($ 0.82) each for every Rs. 100/- ($ 8.22) outstanding on the said Debentureholders. Consequently, difference between the outstanding value of such debentures surrendered and the paid-up value of Equity Shares issued amounting to Rs. 5.92 ($ 0.49) million has been credited to Share Premium Account. 38 Schedule -‘N’ (Contd.) NOTES AND CONTINGENT LIABILITIES (Contd.) 14. (a) From 1st January, 1982 to 31st December, 1984 the Company had capitalised a sum of Rs. 1907.23 ($ 156.77) million in respect of interest on long term borrowings availed for procuring Fixed Assets for the entire contracted period of such borrowings. In view of the proposed amendment to Section 43 of Income Tax Act, 1961, vide Finance Bill 1986, the Company has decided to capitalise interest on the said borrowings only upto the date of commissioning of the Plant. Accordingly the Company has recalculated the cost of Fixed Assets from 1st January, 1982, and its consequent effect on depreciation, interest and on sale of (In million) assets for the years 1982 to 1984 have been adjusted in the, Accounts as under: Reliance Less: Short provision of interest for the past years (i) Excess provision for depreciation written-back (ii) Net adjustment on Sale of Assets Net debit to Profit and Loss Account Rs. Rs. $ $ 192.71 15.84 111.02 0.41 9.13 0.03 111.43 81.28 9.16 6.68 (b) No provision for taxation on this account is considered necessary (Refer Note No. 15 below). (c) Investment Allowance Reserve created on account of above capitalisation of Interest in the previous year is being carried forward. (d) Had the Company continued the said practice of capitalisation of Interest in the current year, the figures of Fixed Assets, Reserves and Current Liabilities for the year would have been higher by Rs. 5043.76 ($ 414.60) million, Rs. 94.34 ($ 7.75) million and Rs. 4732.78 ($ 389.03) million respectively and the charge to Profit and Loss Account on account of Depreciation would have been higher by Rs. 107.30 ($ 8.82) million and on account of Interest lower by Rs. 110.90 ($ 9. 11) million. 15. The Company has been advised that there will be no tax liabilities for the years ending 31st December, 1983 to 31st December, 1985 in view of the various reliefs considered admissible. However, as a measure of abundant caution, an amount of Rs. 100.00 ($ 8.22) million has been transferred from the Profit and Loss Account to the Taxation Reserve Account. 16. Pre-operative expenses in respect of various projects upto December, 1985 capitalised/to be capitalised by allocating toPlant & Machinery and Building: Rs. Rs. (In million) $ $ Cost of construction and fabrication materials at site Cost of Trial Run Production Labour Charges Power, Fuel and Water Payment to and Provision for employees Insurance Travelling Expenses General Expenses Debenture Issue Expenses Interest on: Debentures Fixed Loans Less: Interest on Fixed Deposit Account with Banks Profit on Sale of Investment Less: Allocated to Plant & Machinery and Building Capital Expenditure pending allocation 83.41 0.51 1.64 3.11 0.41 3.23 2.01 37.95 94.30 310.80 537.37 46.48 490.89 108.86 382.03 250.61 60.19 35.89 10.59 20.60 4.95 2.95 0.87 6.86 0.04 0.13 0.26 0.03 0.27 0.16 3.12 7.75 25.55 44.17 3.82 40.35 8.95 31.40 39 Schedule -'N' (Contd.) NOTES AND CONTINGENT LIABILITIES (Contd.) 17. Sundry Creditors' includes: (a) For Capital Expenditure (b) Fixed Deposits matured but unclaimed (In million) 1985 1984 Rs. $ Rs. $ 68.58 1.65 5.64 0.14 35.31 2.37 2.83 0.19 (In million) 1985 1984 18. Contingent Liabilities: Rs. $ Rs. $ (a) Estimated amount of contracts remaining to be executed on Capital account and not provided for (b) Outstanding guarantees furnished by Bankers (c) Bonds executed in favour of Excise and Customs Authorities (d) Uncalled liability on partly-paid shares [Rs. 16,875 ($ 1387)] [Previous year Rs. 16,875 ($ 1387)] (e) Show Cause Notice from Excise Authority in respect of Polyester Yarn contested by the Company (f) Claims against the Company not acknowledged as, debts (g) Export Bills discounted against irrevocable Letters of Credit (h) (i) Disputed Income Tax Liability for the Accounting year 1982 Indemnities towards export obligations against capital goods imports 6830.79 237.67 535.03 561.49 19.54 43.98 610.62 18.03 233.29 48.91 1.44 18.69 –– –– 0.02 –– 272.34 3.90 0.32 30.40 20.25 22.39 0.32 0.03 2.50 1.66 –– 21.52 0.65 28.60 –– –– 1.72 0.05 2.29 –– Unit Licensed Capacity Installed Capacity 1985 1984 1985 1984 19. Licensed and Installed Capacity: (a) Polyester Yam (b) Polyester Staple Fibre (c) Cotton/Blended Yam (Spindles) (d) Cotton/Man-made Fabrics (Looms) (Knitting m/c.) (e) Purified Terephthalic Acid (f) Linear Alkyl Benzene (g) High Density Polyethylene* (h) Poly Vinyl Chloride* (i) Mono Ethylene Glycol*, (j) Polyester Industrial Yam* (k) Spandex Fibre/Yam * On the basis of Letter of Intent received. 40 M.T. M.T. Nos. Nos. Nos. M.T. M.T. M.T. M.T. M.T. M.T. M.T. 25125 45000 12500 450 22 75000 50000 50000 100000 40000 2000 300 25125 50868 940 22 25125 –– (Under implementation) (Commissioned in March 1986) 12494 450 18 75000 Under implementation –– do –– 50000 –– d0 –– –– –– d0 –– –– –– d0 –– 40000 –– d0 –– –– –– –– 10000 –– 50862 940 22 –– –– –– –– –– –– –– Schedule -‘N’ (Contd.) NOTES AND CONTINGENT LIABILITIES 20. Production: Yarn (POY, PFY, Cotton and Blended) Fabrics Methanol (By-product) *Including for captive use/Trial Run Production. 21. Value of Imports on C.I.F. basis in respect of: (Based on retirement of documents) (a) Raw Materials (b) Dyes and Chemicals, Stores and Spare Parts (c) Capital Goods 22. Expenditure in Foreign Currency on account of: Interest on Foreign Currency Loans Interest on Debentures held by Non-residents on repatriation basis (Gross) Other matters [including commitment charges Rs. 1.90 ($ 0.16) million on Foreign Currency Loans-Previous year Rs. 2.46 ($ 0.20) million] Technical knowhow and Engineering Fees (Net of taxes) 23. Quantitative Information in respect of Opening Stock, Closing Stock, Purchases, Sales and Consumption of Raw Materials (a) Opening Stock: Yarn Fabrics Stock-in-process (Yarn) Stock-in-process (Fabrics). Methanol (By-product) Others (b) Closing Stock: Yam Fabrics Stock-in-process (Yarn) Stock-in-process (Fabrics) Others (c) Purchases: Fibre Yarn Fabrics Sea Foods D.M.T. Unit Kgs. Mtrs. Kgs. Mtrs. Kgs. Kgs. Kgs. Mtrs. Kgs. Mtrs. Kgs. Kgs. Kgs. Mtrs. Kgs. Kgs. Qty. 1.43 4.91 1.57 6.30 –– 0.01 1.47 7.48 1.86 9.95 0.24 0.04 1.80 3.51 0.87 1.40 Rs. 177.43 152.23 180.70 160.73 –– 0.12 152.14 216.17 185.79 220.71 31.40 3.47 355.89 102.19 49.45 21.53 Reliance (In million) 1985 * 30.35 58.27 –– 1984 * 26.32 51.27 0.93 Rs. 239.35 36.86 243.18 Rs. 182.55 1.90 3.26 –– Rs. 274.77 135.01 186.38 167.06 0.74 0.14 177.43 152.23 180.70 160.73 0.12 1.44 381.31 131.48 33.62 39.08 (In million) 1984 $ 19.17 2.95 19.48 (In million) 1984 $ 14.62 0.15 0.26 –– (In million) 1984 $ 22.01 10.81 14.93 13.38 0.06 0.01 14.58 12.51 14.86 13.21 0.01 0.12 30.54 10.53 2.69 3.13 41 Unit Kgs. Mtrs. Kgs. 1985 $ 36.97 3.45 96.94 1985 $ 13.99 0.33 0.69 17.37 Qty. 2.38 4.78 2.14 8.10 0.13 0.01 1.43 4.91 1.57 6.30 0.01 0.02 2.09 8.12 0.75 2.48 Rs. 449.79 42.02 1179.38 Rs. 170.18 4.00 8.41 211.33 1985 $ 14.58 12.51 14.86 13.21 –– 0.01 12.51 17.77 15.27 18.14 2.58 0.29 29.25 8.40 4.06 1.77 Schedule -‘N’ (Contd.) NOTES AND CONTINGENT LIABILITIES (Contd.) (d) Sales Fibre Yarn (POY, PFY, Cotton and Blended) Fabrics Methanol (By-product) Sea Foods D.M.T. (e) Raw Materials Consumed: P.T.A/D.M .T./Poly. Chips M.E.G Cotton Fibre Yarn Fabrics (Grey) Unit Kgs. Kgs. Mtrs. Kgs. Kgs. Kgs. Kgs. Kgs. Kgs. Kgs. Kgs. Mtrs. Qty. 0.04 27.07 59.21 –– 0.87 1.40 21.14 8.41 0.44 1.60 6.62 12.96 Rs. 3.47 4819.07 2217.64 –– 49.45 23.87 457.09 122.69 7.21 154.39 1203.77 288.94 1985 $ 0.29 396.13 182.29 –– 4.06 1.96 37.57 10.09 0.59 12.69 98.95 23.75 Qty. 0.02 25.64 59.26 1.07 0.75 2.48 19.16 7.40 0.86 1.81 4.63 11.59 Rs. 1.40 4135.55 1825.01 4.64 33.62 42.52 356.07 108.79 14.20 137.83 784.66 217.88 24. Value of Raw Materials Consumed: Imported [including Import Duty Rs. 750.20 ($ 61.67) million] Indigenous 25. Value of Dyes and Chemicals, Stores and Spare Part's Consumed: Imported Indigenous Rs. 1985 $ % of total consumption Rs. $ 1222.72 1011.37 100.51 83.13 54.73 45.27 508.62 1110.81 40.74 88.98 2234.09 183.64 100.00 1619.43 129.72 Rs. 75.75 181.82 257.57 1985 $ % of total consumption Rs. $ 6.23 14.94 21.17 29.41 70.59 100.00 58.51 161.29 219.80 4.68 12.92 17.60 (In million) 1984 $ 0.11 331.26 146.18 0.37 2.69 3.41 28.52 8.71 1.14 11.04 62.86 17.45 (In million) 1984 % of total consumption 31.41 68.59 100.00 (In million) 1984 % of total consumption 26.62 73.38 100.00 (In million) 26. Earnings in Foreign Exchange: Export of Goods on F.O.B. basis 42 Rs. 56.41 56.41 1985 $ 4.64 4.64 Rs. 41.79 41.79 1984 $ 3.35 3.35 Schedule -‘N’ (Contd.) NOTES AND CONTINGENT LIABILITIES (Contd.) 27. Remittance in Foreign Currency on account of Dividend: The Company has not made any remittance in Foreign Currencies on account of dividend and does not Wave information as to the extent to which remittances in foreign currencies on account of dividend have been made by or on behalf of non-resident shareholders held on repatriation basis. The particulars as required are given herebelow as at the end of the year: Reliance (In million) 1984 1985 Rs. $ Rs. $ 43 3173181 25 2975280 12.10 0.99 8.75 0.70 (a) Number of non-resident shareholders (b) Number of Equity Shares held by them (i) Amount of dividend paid (Gross) (c) [Tax at Source Rs. 3.01 ($ 0.25) million] [Previous Year Rs. 2.18 ($ 0.17) million] (ii) Year to which dividend relates 28.(a) Break-up of expenditure incurred on employees, who were employed throughout the year and were in receipt of remuneration for the year which in aggregate was not less than Rs. 36,000 ($ 2959) per annum : (i) Number of employees (ii) Salaries and Bonus . (iii) Contribution to Provident Fund and Superannuation Fund (iv) Other Perquisites (b) Break-up of expenditure incurred on employees who were employed for a part of the year and were in receipt of remuneration for any part of the year at a rate which in aggregate was not less than Rs. 3,000 ($ 247) per month (i) Number of employees (ii) Salaries and Bonus (iii) Contribution to Provident Fund and Superannuation Fund (iv) Other Perquisites 1984 1985 $ Rs. 1983 (Rs./$ in million) 1984 $ Rs. 431 342 16.71 3.70 5.92 1.37 0.30 0.49 12.61 2.81 4.68 1.01 0.23 0.37 63 52 1.37 0.28 0.46 0.11 0.02 0.04 1.02 0.23 0.35 0.08 0.02 0.03 As per our Report of even date For RAJENDRA & CO. Chartered Accountants For CHATURVEDI & SHAH Chartered Accountants For and on behalf of the Board R. H. AMBANI Joint Managing Director R. J. SHAH Proprietor D. CHATURVEDI Partner BOMBAY, Dated: 4th April, 1986. K. GOPAL RAO J. R. SHAH M. L. BHAKTA V. V. DIVECHA N. H. AMBANI M. D. AMBANI A. D. AMBANI Directors Executive Directors V. M. AMBANI Secretary 43 AUDITORS' REPORT To THE MEMBERS OF RELIANCE INDUSTRIES LIMITED We have audited the attached Balance Sheet of RELIANCE INDUSTRIES LIMITED as at 31st December, 1985 and also the annexed Profit and Loss Account of the Company for the year ended on that date. We report that : 1. 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. 2. 3. 4. 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 the Books of Account. The Balance Sheet and Profit and Loss Account dealt with by the report are in agreement with the Books of Account. In our opinion and to the best of our information and according to the explanations given to us, the Accounts read with the notes thereon and subject to: (a) Note No. 8 regarding non-receipt of Liquidator's statement of accounts; (b) Note No. 14 regarding reversal of interest capitalised in earlier years and its consequential effects on accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view: in the case of the Balance Sheet of the state of affairs of the Company as at 31st December, 1985, and (i) (ii) 6. 7. 8. 9. On the basis of selective checks carried out during the course of audit and according to the information and explanations given to us, there are adequate internal control procedures, commensurate with the size of the Company and the nature of its business for purchases of stores, raw materials including components, plant and machinery, equipments and other assets. There are no purchases during the year of stores, raw materials or components from the firms or companies or other parties in which Directors are interested. save and except from a Subsidiary Company as listed in the register maintained under Section 301 of the Companies Act, 1956. The prices paid in respect of purchases made from the Subsidiary Company in excess of Rs. 10,000/- in value for each type of item so purchased are reasonable as compared to prices quoted by others or as per information available with the Company. As explained to us, the Company has a regular procedure for the determination of unserviceable or damaged stores and raw materials. Adequate provision has been made in the Accounts for the loss arising on the items so determined. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58-A of the Companies Act, 1956 and rules made thereunder, with regard to Fixed Deposits accepted from the Public. 10. The Company has no by-products and in our opinion reasonable records have been maintained by the Company for sale and disposal of realisable scrap wherever significant. in the case of the Profit and Loss Account of the 'Profit' for the year ended on that date. 11. The Company has an internal audit system commensurate with the size and nature of its business. As required by the Manufacturing and Other Companies (Auditor's Report) Order, 1975 issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate, we further report that: The Company has maintained proper records showing full particulars including quantitative details and situation of all fixed assets except furniture and fixtures and factory equipments in respect of which proper records are maintained only from 1st January, 1979 onwards. The fixed assets have been physically verified by the Management during the year and no serious discrepancies were noticed on such verification as compared with the available records. None of the Fixed Assets have been revalued during the year. Physical verification was conducted by the Management at reasonable intervals during the year in respect of finished goods, stores, spare parts and raw materials, save and except goods lying with third parties. The discrepancies noticed on such verification as compared with the book records were not significant and the same have been properly dealt with in the Books of Account. The valuation of these stocks is fair and proper and is in accordance with the normally accepted accounting principles and is an the same basis as in the earlier years. The stock of trial run production has been valued at estimated realisable value. The Company has not taken any loans from Companies, Firms or other parties listed in the registers maintained under Sections 301 and 370(1-C) of the Companies Act. 1956. 12. The Central Government has prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of the manufacturing activities of the Company. We are informed that such accounts and records have prima jape, been maintained in respect of the Patalganga and Sidhpur Units. Compilation of such records of Naroda Unit for the year is in progress. We have not, however, made a detailed examination of the same. 13. 14. 15. Provident Fund dues have been regularly deposited during the year with the appropriate authorities. In respect of trading activities, we are informed that the Company does, not have damaged goods lying with it at the end of the year. Therefore no provision for any loss is required to be made in the Accounts. In respect of processing activities, we are informed that the Company has a reasonable system of recording receipts, issues and consumption of materials and stores commensurate with the size and nature of its business and the system provides for a reasonable allocation of materials and man-hours consumed to the relative jobs. In our opinion, there is reasonable system for authorisation at proper levels with necessary control on the issues and allocation of stores and labour to relative jobs. For RAJENDRA CO. Chartered Accountants For CHATURVEDI SHAH Chartered Accountants R. J. SHAH Proprietor D. CHATURVEDI Partner Loans and Advances in the nature of loans have been given to the employees and to the Subsidiary Company free of interest. The repayments of principal amount in most of the cases are as stipulated. Bombay Dated: 4th April, 1986. 1. 2. 3. 4. 5. 44 Reliance STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO COMPANY'S INTEREST IN THE SUBSIDIARY COMPANY VIZ., DEVTI FABRICS LIMITED 1. The Financial Year of the subsidiary company ended on 2. Date from which it became subsidiary 3. (a) No. of shares held by Reliance Industries Limited (holding company) with its nominees in the subsidiary at the end of the financial year of the subsidiary 30th September,. 1985 30th September, 1985 70 Equity Shares of the face value of Rs. 10 ($ 0.82) each fully paid-up (b) Extent of interest of holding company at the end of the financial year of the subsidiary 100% 4. The net aggregate amount of the subsidiary's profits, -less losses, so far as it concerns the members of the holding company: Not dealt with the holding company's accounts: (i) For the financial year ended 30th September, 1985 Rs. 7,500 (LOSS) ($ 616) (ii) For the previous financial years of the subsidiary since it became the holding company's subsidiary (b) Dealt with in the holding company's accounts: (i) For the financial year ended 30th September, 1985 (ii) For the previous financial years of the subsidiary since it became the holding company's subsidiary 5. Changes in the holding company's interest, in the subsidiary between the end of the financial year of the subsidiary and the end of the holding company's Financial year Rs. 6,750 (LOSS) ($ 555) Nil Nil Total holding in the Equity Shares of the subsidiary has gone up from Rs. 700 ($ 58) to Rs. 21,00,700 ($ 1,72,678) by subscription of additional Equity Shares aggregating Rs. 2.10 ($ 0.17) million by the holding company before the year end of the holding company. 6. From 1st October, 1985, the company has transferred its Sidhpur Unit . as a going concern with part of its assets and liabilities. It has also given on lease some of its assets to the subsidiary company from the said date. 7. Material changes between the end of financial year of the subsidiary and the end of the holding company's financial year in respect of: (i) The subsidiary's fixed assets (ii) Its investments (iii) The money lent by it Rs. 7.30 ($ 0.60) million (increase) Nil Nil (iv) Monies borrowed by it for any purpose other than of meeting current liabilities Rs. 14.20 ($ 1.17) million BOMBAY, Dated: 4th April, 1986. For and on behalf of the Board R. H. AMBANI Joint Managing Director K. GOPAL RAO J. R. SHAH M. L. BHAKTA V. V. DIVECHA N. H. AMBANI M. D. AMBANI A. D. AMBANI Directors Executive Directors V. M. AMBANI Secretary 45 DEVTI FABRICS LIMITED BALANCE SHEET AS AT 30TH SEPTEMBER, 1985 SOURCES OF FUNDS: Rs. $ Rs. 1985 $ Rs. $ Rs. 1984 $ Shareholders' Funds: Capital Authorised 2,50,000 Equity Shares of Rs. 1W ($ 0.82) each 25,00,000 2,05,500.00 25,00,000 2,00,250.00 Issued, Subscribed and Paid-up 70 Equity Shares of Rs. 1W ($ 0.82) each (All the Shares are held by Reliance Industries Ltd., the Holding Company.) Loan Funds Unsecured Loans from Holding Company Total APPLICATION OF FUNDS: Current Assets, Loans and Advances: Cash and Bank Balance Cash Balance with a Scheduled Bank (In Current Account) Miscellaneous Expenditure (to the extent not written-off) Preliminary Expenses Profit and Loss Account Less: Current Liabilities and Provisions: Sundry Creditors Total Notes: Schedule ‘A’ As per our Report of even date For RAJENDRA & CO., Chartered Account-ants 700 57.54 700 56.07 18,150 18,850 1491.93 1549.47 –– 700 –– 56.07 700 500 57.54 41.10 200 500 16.02 40.05 1,200 98.64 700 56.07 18,370 14,250 1510.01 1171.35 13,720 6,750 1098.97 540.67 32,620 33,820 2681.36 2780.00 14,970 18,850 1230.53 1549.47 20,470 21,170 1639.64 1695.71 20,470 1639.64 700 56.07 For CHATURVEDI & SHAH Chartered Accountants For and on behalf of the Board S. NATARAJAN KIRTI V. AMBANI VINOD M. AMBANI Directors R. J. SHAH Proprietor D. CHATURVEDI Partner BOMBAY Dated: 27th February, 1986. 46 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH SEPTEMBER, 1985 DEVTI FABRICS LIMITED INCOME: EXPENDITURE Directors' Sitting Fees Audit Fees Certification Fees to Auditors Professional Tax General Expenses Add: Brought forward from Previous Year Carried to Balance Sheet Notes: Schedule ‘A’ 1985 $ –– Rs. –– 1984 $ –– Rs. –– 4,750 390.45 4,500 360.45 1,500 123.30 1,500 120.15 500 250 500 41.10 20.55 41.10 500 250 –– 40.05 20.02 –– 7,500 616.50 6,750 540.67 6,750 554.85 –– –– 14,250 1171.35 6,750 540.67 NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30TH SEPTEMBER, 1985 1. Previous year's figures relate to the period from 17-12-1983 to 30-9-1984 and are not strictly comparable with those of the current year. 2. No manufacturing or trading activity was carried out during the year. Hence, information required as per para 3 and 4 of Part 11 of Schedule VI of the Companies Act, 1956, is not given. 3. The Company has become a wholly-owned subsidiary of Reliance industries Limited upon transfer of all the 70 Equity Shares in the Company. As per our Report of even date For RAJENDRA & CO., Chartered Account-ants For CHATURVEDI & SHAH Chartered Accountants R. J. SHAH Proprietor D. CHATURVEDI Partner For and on behalf of the Board S. NATARAJAN KIRTI V. AMBANI VINOD M. AMBANI Directors BOMBAY Dated: 27th February, 1986. 47 DEVTI FABRICS LIMITED DIRECTORS' REPORT AUDITORS' REPORT To the Members, Your Directors present the Second Annual Report together with the Audited Statement of Accounts for the year ended 30th September, '1985. Operations During the year under review, the Company his incurred a loss of Rs. 7,500 ($ 616) has carried a sum of Rs, 14,250 ($ 1171) to the Balance Sheet [including loss of Rs 6,750 ($ 555) relating to the previous period ended 30th September, 1984] and ha, not undertaken am activity. The Company, became a Subsidiary Company of Reliance Industries Limited, with effect front 30th September. 1985. As per the arrangement between the Company and Reliance Industries Ltd., the Company has taken over the employees at Sidhpur on its rolls, Since the end of the accounting year, Reliance industries Limited (the Holding Company has subscribed to the Equity Shares of your Company to the extent of R,, 2, 10 ($ 0.17 million. The Company has taken over the running business of the undertaking at Sidhpur belonging to Reliance Industries Limited, with effect from 1st October, 1985 The Company has, already commenced production and sale of blended fabric, The Directors are hopeful that the current year's working will be satisfactory, The Company is negotiating with Bank of Baroda for extending working capital requirementss Directors Messrs Susheel M. Kothari, Natubhai M Sanghvi, Vinod M. Ambani, Kirti V. Ambani, S Natarajan, who were appointed as additional Directors, will hold office upto the date of the ensuing Annual General Meeting. The Company has received letters from them seeking re-election. Messrs Sohan Chaturvedi, Mansukhlal G. Mehta and Indubhai F. Sheth resigned from the Board on 30th September, 1985. Auditors To The Members of Devti Fabrics Limited We have audited the attached Balance Sheet of DEVTI FABRICS LIMITED as at 30th September, 1985 and also the annexed Profit and Loss Account of the Company for the period ended on that date. We report that: 1. 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. 2. 3. 4. In our opinion. proper Books of Account as required by jaw hay c been kept h,, the Company, o far a, appears from our examination of the Books of Account The Balance Sheet and Profit and Loss Account deal., with by the report are in agreement with the Books of Account. In our opinion and to the best of our information and according to the explanations given to us, the Accounts read with notes thereon, give the information required by the Companies Act, 1950 in the mariner so required and give a true and fair view: (i) (ii) in the case of Balance Sheet of the State of Affairs of the Compamy as at 30th September, 1985. in the case of Profit and Loss Accounts of the `Loss' for the period ended on that date We further report that this report does not include a statement on the matters specified in paragraph 4 and 5 of the Manufacturing and Other Companies (Auditors' Report) Order, 1975 as the Company was not engaged in any of the activities referred to in Clause 1 of the said order for the year ended 30th September, 1985. For RAJENDRA CO. Chartered Accountants For CHATURVEDI SHAH Chartered Accountants R. J. SHAH Proprietor D. CHATURVEDI Partner Rajendra & Company and Messrs. Chaturvedi & Shah, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment Bombay Dated: 27th February, 1986. For and on behalf of the Board S. NATARAJAN Director KIRTI V. AMBANI Director Registered Office : 3rd Floor, Maker Chamber IV, 222, Nariman Point, Bombay - 400 021. Dated : 27th February, 1986. 48 

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