Reliance Industries Limited Financial Summary 1993-94 7 9 S A L E S S A L E S S A L E S S A L E S S A L E S A N D A N D A N D A N D A N D E A R N I N G S E A R N I N G S E A R N I N G S E A R N I N G S E A R N I N G S inancial Highlights inancial Highlights FFFFFinancial Highlights inancial Highlights inancial Highlights (Rs. in Crores) W H A T T H E C O M P A N Y W H A T T H E C O M P A N Y W H A T T H E C O M P A N Y W H A T T H E C O M P A N Y W H A T T H E C O M P A N Y O W N E D O W N E D O W N E D O W N E D O W N E D F I X E D A S S E T S F I X E D A S S E T S F I X E D A S S E T S F I X E D A S S E T S F I X E D A S S E T S Sales Sales Sales Sales Sales OtherOtherOtherOtherOther Income Income Income Income Income Total Total Total Total Total Income Income Income Income Income (A) (A) (A) (A) (A) Manuf- Manuf- Manuf- Manuf- Manuf- cturing cturing cturing cturing cturing & & & & & OtherOtherOtherOtherOther Ex-Ex-Ex-Ex-Ex- penses penses penses penses penses (B) (B) (B) (B) (B) Operating Operating Operating Operating Operating Profit (A-B) Profit (A-B) Profit (A-B) Profit (A-B) Profit (A-B) (C) (C) (C) (C) (C) Inter- Inter- Inter- Inter- Inter- est est est est est (D) (D) (D) (D) (D) Cash Cash Cash Cash Cash Profit Profit Profit Profit Profit (C-D) (C-D) (C-D) (C-D) (C-D) (E) (E) (E) (E) (E) Deprec- Deprec- Deprec- Deprec- Deprec- iation iation iation iation iation (F) (F) (F) (F) (F) Profit After Profit After Profit After Profit After Profit After Tax (E-F) Tax (E-F) Tax (E-F) Tax (E-F) Tax (E-F) GrossGrossGrossGrossGross Block Block Block Block Block Less: Less: Less: Less: Less: Deprec- Deprec- Deprec- Deprec- Deprec- iation iation iation iation iation (cumu- (cumu- (cumu- (cumu- (cumu- lative) lative) lative) lative) lative) Net Block Net Block Net Block Net Block Net Block Invest- Invest- Invest- Invest- Invest- mentsmentsmentsmentsments Cur-Cur-Cur-Cur-Cur- rent rent rent rent rent Assets Assets Assets Assets Assets Total Total Total Total Total 5345.18 5345.18 5345.18 5345.18 5345.18 116.00 5461.78 *439692 1064.26 1064.26 1064.26 233.58 1064.26 1064.26 830.68 255.19 575.49 575.49 575.49 575.49 575.49 5132.32 1532.68 3599.64 3599.64 3599.64 3599.64 3599.64 1990.18 2531.64 8121.46 4105.54 4105.54 4105.54 4105.54 4105.54 68.46 4173.96 *329305 880.91 880.91 880.91 880.91 880.91 279.35 601.56 279.81 321.75 321.75 321.75 321.75 321.75 4640.53 1272.69 3367.84 3367.84 3367.84 3367.84 3367.84 779.67 1861.64 6009.15 295321 295321 295321 295321 295321 42.15 2995.36 *2420.75 574.61 574.61 574.61 574.61 574.61 218.65 355.96 192.64 163.32 163.32 163.32 163.32 163.32 4314.33 976.22 3338.11 3338.11 3338.11 3338.11 3338.11 61.95 1480.15 4880.21 2098.34 2098.34 2098.34 2098.34 2098.34 6.55 2104.89 1617.87 487.02 487.02 487.02 487.02 487.02 187.05 299.97 174.42 125.55 125.55 125.55 125.55 125.55 2186.42 703.85 1482.57 1482.57 1482.57 1482.57 1482.57 69.53 1160.22 2712.32 1840.66 1840.66 1840.66 1840.66 1840.66 15.64 1856.30 1432.10 424.20 424.20 424.20 424.20 424.20 71.73 252.47 161.97 90.50 90.50 90.50 90.50 90.50 1998.79 529.78 1469.01 1469.01 1469.01 1469.01 1469.01 58.05 1026.26 2553.32 1112.45 1112.45 1112.45 1112.45 1112.45 7.88 1120.33 862.58 257.75 257.75 257.75 257.75 257.75 91.58 166.17 86.80 79.37 79.37 79.37 79.37 79.37 1871.76 368.98 1502.78 1502.78 1502.78 1502.78 1502.78 58.50 849.46 2410.74 1770.74 1770.74 1770.74 1770.74 1770.74 7.45 1778.19 1495.27 282.92 282.92 282.92 282.92 282.92 10.74 172.18 91.41 80.77 80.77 80.77 80.77 80.77 1862.66 278.58 1584.08 1584.08 1584.08 1584.08 1584.08 1.25 607.83 2193.16 905.48 905.48 905.48 905.48 905.48 5.73 911.21 781.82 129.39 129.39 129.39 129.39 129.39 54.24 75.15 60.98 14.17 14.17 14.17 14.17 14.17 1137.55 188.09 949.46 949.46 949.46 949.46 949.46 0.37 1052.83 2002.66 733.14 733.14 733.14 733.14 733.14 4.94 738.08 604.83 133.25 133.25 133.25 133.25 133.25 24.45 108.80 37.46 71.3471.34 71.3471.34 71.34 735.68 128.88 606.80 606.80 606.80 606.80 606.80 37.30 402.10 1046.20 622.01 622.01 622.01 622.01 622.01 7.11 629.12 511.23 117.89 117.89 117.89 117.89 117.89 22.61 95.28 34.18 61.1061.1061.1061.1061.10 530.93 104.65 426.28 426.28 426.28 426.28 426.28 0.17 235.41 661.86 1993-94 1993-94 1993-94 1993-94 1993-94 1992-93 1992-93 1992-93 1992-93 1992-93 1991-92 1991-92 1991-92 1991-92 1991-92 1990-91 1990-91 1990-91 1990-91 1990-91 1989-90 1989-90 1989-90 1989-90 1989-90 1988-89 1988-89 1988-89 1988-89 1988-89 (9 Months) 1987-88 1987-88 1987-88 1987-88 1987-88 (18 Months) 1986 1986 1986 1986 1986 1985 1985 1985 1985 1985 1984 1984 1984 1984 1984 4 W H A T T H E W H A T T H E W H A T T H E W H A T T H E W H A T T H E C O M P A N Y C O M P A N Y C O M P A N Y C O M P A N Y C O M P A N Y O W N E D O W N E D O W N E D O W N E D O W N E D N E T N E T N E T N E T N E T W O R T H W O R T H W O R T H W O R T H W O R T H O F O F O F O F O F T H E T H E T H E T H E T H E C O M P A N Y C O M P A N Y C O M P A N Y C O M P A N Y C O M P A N Y LongLongLongLongLong T e r mT e r mT e r mT e r mT e r m F u n d s F u n d s F u n d s F u n d s F u n d s Me-Me-Me-Me-Me- d i u m / d i u m / d i u m / d i u m / d i u m / S h o r t S h o r t S h o r t S h o r t S h o r t T e r mT e r mT e r mT e r mT e r m F u n d s F u n d s F u n d s F u n d s F u n d s C u r r e n t C u r r e n t C u r r e n t C u r r e n t C u r r e n t L i a b i l - L i a b i l - L i a b i l - L i a b i l - L i a b i l - ities ities ities ities ities a n da n da n da n da n d P r o v i - P r o v i - P r o v i - P r o v i - P r o v i - s i o n s s i o n s s i o n s s i o n s s i o n s T o t a l T o t a l T o t a l T o t a l T o t a l Equity Share Equity Share Equity Share Equity Share Equity Share C a p i t a l C a p i t a l C a p i t a l C a p i t a l C a p i t a l Net Worth Net Worth Net Worth Net Worth Net Worth P r e f e r e - P r e f e r e - P r e f e r e - P r e f e r e - P r e f e r e - n c en c en c en c en c e S h a r e S h a r e S h a r e S h a r e S h a r e C a p i t a l C a p i t a l C a p i t a l C a p i t a l C a p i t a l R e s e r - R e s e r - R e s e r - R e s e r - R e s e r - vesvesvesvesves a n da n da n da n da n d S u r - S u r - S u r - S u r - S u r - P l u s P l u s P l u s P l u s P l u s E a r n - E a r n - E a r n - E a r n - E a r n - i n g s i n g s i n g s i n g s i n g s P e rP e rP e rP e rP e r E q u i t y E q u i t y E q u i t y E q u i t y E q u i t y S h a r e * * S h a r e * * S h a r e * * S h a r e * * S h a r e * * ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) Cash Earnings Cash Earnings Cash Earnings Cash Earnings Cash Earnings per Equity per Equity per Equity per Equity per Equity S h a r e * * S h a r e * * S h a r e * * S h a r e * * S h a r e * * ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) : Net Debt : Net Debt : Net Debt Net Debt : : Net Debt w o r t h w o r t h w o r t h w o r t h w o r t h P e rP e rP e rP e rP e r E q u i t y E q u i t y E q u i t y E q u i t y E q u i t y S h a r e S h a r e S h a r e S h a r e S h a r e ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) ( R u p e e s ) N u m b e r N u m b e r N u m b e r N u m b e r N u m b e r E q u i t y E q u i t y E q u i t y E q u i t y E q u i t y R a t i o R a t i o R a t i o R a t i o R a t i o N u m b e r N u m b e r N u m b e r N u m b e r N u m b e r o fo fo fo fo f I n v e s - I n v e s - I n v e s - I n v e s - I n v e s - (in tors (in tors (in tors (in tors (in tors l a k h s ) l a k h s ) l a k h s ) l a k h s ) l a k h s ) N u m b e r N u m b e r N u m b e r N u m b e r N u m b e r o fo fo fo fo f E m p l o y - E m p l o y - E m p l o y - E m p l o y - E m p l o y - e e se e se e se e se e s 2501.64 23.07 1261.86 3786.57 318.32 318.32 318.32 318.32 318.32 5.50 4011.07 4334.89 4334.89 4334.89 4334.89 4334.89 21.18 30.59 30.59 30.59 30.59 30.59 136.01 0.58:1 41 11873 2187.13 153.18 1056.07 3396.38 245.48 245.48 245.48 245.48 245.48 5.50 2361.79 2612.77 2612.77 2612.77 2612.77 2612.77 13.24 24.79 24.79 24.79 24.79 24.79 106.21 0.84:1 37 11836 1794.15 176.24 966.20 2936.59 227.08 227.08 227.08 227.08 227.08 5.80 1710.74 1943.62 1943.62 1943.62 1943.62 1943.62 10.26 22.42 22.42 22.42 22.42 22.42 85.34 0.92:1 38 11935 708.96 131.26 718.65 1558.87 152.12 152.12 152.12 152.12 152.12 5.80 995.53 1153.45 1153.45 1153.45 1153.45 1153.45 8.20 19.66 19.66 19.66 19.66 19.66 75.44 0.61:1 2 4 11666 595.89 219.50 650.95 1466.34 152.12 152.12 152.12 152.12 152.12 5.80 929.06 1086.98 1086.98 1086.98 1086.98 1086.98 5.89 16.54 16.54 16.54 16.54 16.54 71.07 0.55:1 2 6 11355 579.44 195.11 564.88 1339.43 1 5 2 . 1 1 1 5 2 . 1 1 1 5 2 . 1 1 1 5 2 . 1 1 1 5 2 . 1 1 5.80 913.40 1071.31 1071.31 1071.31 1071.31 1071.31 6.91 14.52 14.52 14.52 14.52 14.52 70.05 0.54:1 31 10983 609.82 103.83 457.39 1171.04 152.10 152.10 152.10 152.10 152.10 5.80 864.22 1022.12 1022.12 1022.12 1022.12 1022.12 5.19 1 1 . 2 1 1 1 . 2 1 1 1 . 2 1 1 1 . 2 1 1 1 . 2 1 66.82 0.60:1 31 10697 546.12 143.78 1001.23 1691.13 51.61 51.61 51.61 51.61 51.61 5.80 254.12 311.53 311.53 311.53 311.53 311.53 2.58 1 4 . 3 9 1 4 . 3 9 1 4 . 3 9 1 4 . 3 9 1 4 . 3 9 5 9 . 2 4 1.75 18 9 3 7 6 515.16 81.90 138.02 735.08 51.61 51.61 51.61 51.61 51.61 5.80 253.71 311.12311.12 311.12311.12 311.12 14.16 2 1 . 6 9 2 1 . 6 9 2 1 . 6 9 2 1 . 6 9 2 1 . 6 9 59.16 1.66:1 17 9066 276.96 44.83 93.68 415.47 46.18 46.1846.18 46.18 46.18 5.80 194.41 246.39 246.39 246.39 246.39 246.39 15.62 2 4 . 4 7 2 4 . 4 7 2 4 . 4 7 2 4 . 4 7 2 4 . 4 7 52.10 1.12:1 15 8914 1993-94 1993-94 1993-94 1993-94 1993-94 1992-93 1992-93 1992-93 1992-93 1992-93 1991-92 1991-92 1991-92 1991-92 1991-92 1990-91 1990-91 1990-91 1990-91 1990-91 1989-90 1989-90 1989-90 1989-90 1989-90 1988-89 1988-89 1988-89 1988-89 1988-89 (9 Months) 1987-88 1987-88 1987-88 1987-88 1987-88 (18 Months) 1986 1986 1986 1986 1986 1985 1985 1985 1985 1985 1984 1984 1984 1984 1984 5 DHIRUBHAI AMBANI, CHAIRMAN 8 D I R E C T O R S R E P O R T T O T H E S H A R E H O L D E R S The Directors have pleasure in presenting the 20th Annual Report and the audited accounts for the financial year ended 31st March, 1994. F I N A N C I A L R E S U LTS ( R s . i n c rores) Gro s s P ro f i t b e f o re I n t e re s t a n d D e p re d a t i o n L e s s i n t e re s t D e p re d a t i o n 1 9 9 3 - 9 4 1 9 9 2 - 9 3 1 0 6 4 . 2 6 8 8 0 . 9 1 2 3 3 . 5 8 2 7 9 . 3 5 2 5 5 . 1 9 2 7 9 . 8 1 YEAR IN RETROSPECT Yo u r C o m p a n y e m e r g e d a s India(cid:146)s largest Corporation in t e r m s o f s a l e s , g ro s s p ro f i t , n e t p r o f i t , n e t w o r t h a n d a s s e t s . T h e t u r n o v e r i n c re a s e d t o R s . 5 3 4 5 cror e s , re c o rd i n g a n i n c r e a s e o f 3 0 % o v e r t h e preceding year. The pr ofit befor e tax increased by 7 9 % t o R s . 5 7 5 c rore s a s c o m p a re d t o R s . 3 2 2 Pro f i t f o r t h e y e a r 5 7 5 . 4 9 3 2 1 . 7 5 crores during the pr eceding year. Your Company A d d: B a l a n c e i n P ro f i t & L o s s A / c A d d: i n v e s t m e n t A l l o w a n c e ( u t i l i s e d ) 5 4 . 4 0 2 7 . 7 5 2 0 . 0 2 1 6 . 1 0 R e s e r v e w r i t t e n b a c k was the second largest contributor to the national exchequer in terms of various taxes amounting to nearly Rs.1391 cror es. S u r p l u s a v a i l a b l e f o r A p p ro p r i a t i o n 6 57.64 3 5 7 . 8 7 Appro p r i a t i o n s : C a p i t a l R e d e m p t i o n R e s e r v e I n v e s t m e n t A l l o w a n c e R e s e r v e D e b e n t u re R e d e m p t i o n R e s e r ve G e n e r a l R e s e r v e R e c o m m e n d e d D i v i d e n d o n Pre f e re n c e a n d E q u i t y S h a re s - 6 . 7 0 3 0 . 5 0 0 . 3 0 9 2 . 0 0 2 5 . 5 0 4 1 9 . 0 2 1 0 0 . 0 0 1 3 9 . 1 8 8 5 . 6 7 B a l a n c e c a r r i e d t o B a l a n c e S h e e t 6 2 . 2 4 5 4 . 4 0 6 5 7 . 6 4 3 5 7 . 8 7 D I V I D E N D S The Directors recommend the following dividends ( s u b j e c t t o d e d u c t i o n o f t a x a t s o u rc e ) f o r t h e f inan c ial year ende d 31 st March , 19 9 4, which if a p p ro v e d a t t h e f o r t h c o m i n g A n n u a l G e n e r a l Meeting will be paid out of profits of the Company f o r th e s aid yea r to a ll th os e s h a re h ol d ers whose names appear on the Register of Members as on 21 st Ju ly, 1994 . On the major financial parameters there has been an all round improvement during the year unde r r e v i e w. T h e d e b t t o e q u i t y gearing ratios improved from 0.84 to 0.58 and from 42% to 2 0 % respectively over the previous year. Based on this debt to equity ratio, your Company has h a s C o m p a n y b o r r o w i n g c a p a c i t y o f o v e r R s . 6 0 0 0 c r o re s . a T h e comfortable interest cover of 3.5 times and has achieved a compounded earnings growth t h e p a s t o f 2 5 % o v e r five years. On Pre f e re n c e S h a res Dividend of Rs. 15 per Share on 5,50,000 Cumulative Redeemable Preference Shares of Rs.100 each fully paid up. ( R s . i n c r ore s ) Yo u r C o m p a n y h a s d e v e l o p e d a c o m p r e h e n s i v e business strategy that emphasis es on maximising long term cash flows and enhancing shareholders(cid:146) 0.83 v a l u e . T h i s s t r a t e g y f o c u s s e s o n c o n t i n u i n g a g g r e s s i v e i n v e s t m e n t i n t h e p e t ro c h e m i c a l s On Equity Share s i) Dividend of Rs. 5.10 per Share o n 2 4 , 5 4 , 8 1 , 3 4 8 E q u i t y S h a re s of Rs.10 each fully paid up. 125.20 Pro rata Dividend on 7 ,44 , 63, 709 E quity S ha res o f Rs .10 e ach ful ly pa id 13. 1 5 ii) b u s i n e s s . i n c r e a s i n g r e t u r n s o n e x i s t i n g i n v e s t m e n t s , o p t i m i s i n g c o s t o f c a p i t a l t h ro u g h appropriate financial policies and continuing to remain a market leader in all its idenced by the growth in the Company(cid:146)s cash flows and earnings which provide fine testimony to the fundamental s t rengths of the Company(cid:146)s businesses. 138.35 139.18 9 PETROCHEM ICALS & FI BRES COM PL EX L o c a t i o n Are a N o . o f e m p l o y e e s Pro d u c t s M a n u F a c t u re d Safety Te c h . P a r t n e r s : P a t a l g a n g a . M a h a r a s h t r a ( 8 0 k m s f ro m B o m b a y ) : 2 0 0 a c re s : 2862 : P o l y s t e r F i l a m e n t Ya r n P o l y s t e r S t a p l e F i b r e P o l y s t e r C h i p s P a r a x y l e n e P u r i f i e d Ter e p h a t a l i c A c i d L i n e a r A l k y l B e n z e n e N o r m a l P a r a f f i n : C o m p l e t e d 1 3 . 8 4 m i l l i o n m a n h o u r s w i t h o u t a l o s t t i m e accident. B r i t i s h S a f e t y C o u n c i l (cid:146)s S w o rd o f H o n o u r f o r t h e s e c o n d y e a r. N a t i o n a l S a f e t y C o u n c i l U S A . Award of honour. again for the s eco nd yea r. : D u p o n t ( U S A ) I C I ( U K ) U O P P ro c e s s I n t e re n a t i o n a l Inc. (US A) U O P I n t e r A m e r i c a n a I n c . ( U S A ) N o . o F C u s t o m e r s : 750 1 0 D I R E C T O R S R E P O R T T O T H E S H A R E H O L D E R S OPERATIONS Polyester Filament Yarn (PFY) FIBRES DIVISION Polyester Staple Fibre (PSF) Your Company(cid:146)s Polyester S t a p l e F i b r e f a c i l i t y a t Patalganga continued to operate at over 100% of capacity and enjoyed the 6000 5000 4000 3000 2000 1000 Sales & Total Income Rs. in Crores 89-90 90-91 91-92 92-93 93-94 Sales Total Income D u r i n g t h e y e a r 5 n e w Spinning machines wer e i n s t a l l e d w h i c h c o m m e n c e d c o m m e r c i a l p r o d u c t i o n i n O c t o b e r 1 9 9 3 a n d o p e r a t e d a t over 100% capacity. The C o m p a n y p r o d u c e d a b o u t 8 5 0 0 0 M T w h i c h constitutes almost 30% of t h e t o t a l i n d u s t r y (cid:146) s position of (cid:145)(cid:145)Preferred Supplier(cid:146)(cid:146) due to emphasis on p r o d u c t i o n o f o v e r 2 8 7 , 0 0 0 M T a m o n g 2 2 consistent high quality wide product mix. addition of new producers. Your Company continued to accor d top priority to products and prompt customer expanding and evolving ser vice. Your Company has d i f f e r e n t p ro d u c t m i x a n d t o i m p r o v e m e n t i n continued its efforts to increase i t s p r o d u c t i o n c a p a c i t y b y debottlenecking/ expansion. All these steps have helped quality to cater more effectively to the changing needs of the market and the customers. As a result 2 new products were introduced namely Micro and M u l t i f i l a m e n t Y a r n w h i c h h a v e r e c e i v e d encouraging response from the market. your Company to maintain its position as the market leader. Your Company entered into a strategic alliance in the Polyester Business with ICI India Ltd, (ICI), under which ICl(cid:146)s Polyester business located at Thane has been F I B R E I N T E R M E D I AT E S D I V I S I O N P u r i f i e d Tere p h t h a l i c A c i d ( P TA ) reconstituted into a new company called Terene Fibres Yo u r C o m p a n y c o n t i n u e d t o b e t h e l a r g e s t India Ltd. (TFIL) which in co)operation with your producer of PTA and Paraxylene in the countr y the Company has been managing the manufacturing e n t i r e P a r a x y l e n e i s c a p t i v e l y c o n s u m e d b y the operations. The raw materials are supplied by your Company. Company and the finished products are marketed by your Company. This unit has a capacity of 30,000 MT Your Company produced about 255,000 MT of PTA achieving over 100% of capacity utilisation As a per annum which is operating at near 100% capacity. re s u l t t h e m a r k e t s h a r e i n D M T / P TA p ro d u c t s As a result, the Company has increased its existing Increased fr om 65% to 68%. With the continued product mix profile which now includes speciality preference for the PTA route for manufactur e o f products. This has enhanced the market share of the Company from 33% to 40%. polyesters in India the demand for PTA is expected t o g row ahead of available capacity. 1 1 D I R E C T O R S R E P O R T T O T H E S H A R E H O L D E R S Considering the long term potential you Company is in the T h e y e a r s a w a s h a r p r i s e i n t h e p r i c e s o f r a w process of imple- m a t e r i a l s , p a r t i c u l a r l y o f E t h y l e n e D i - C h l o r i d e mting an additional world scale P T A p l a n t o f 3 5 0 , 0 0 0 T P A a t t h e H a z i r a complex . Ethylene Glycol (EG) Yo u r C o m p a n y i s t h e l a rg e s t p ro d u c e r o f M E G , producing about 90,000 MT of MEG The capacity ut ilis atio n d ur in g t he ye ar un de r re vi e w was close to 10 0%. Mos t of the ME G prod uc t ion at Hazira is us ed c apt ively in the pr od uctio n of polyesters at Patalganga. The Company also sold MEG to other polyester producers who are also the consumers of P TA , Y o u r C o m p a n y a c h i e v e d 5 0 % o f t h e market share. POLYMERS DIVISION Po ly v in yl Chlo r ide ( PVC) a c h i e v e d Your Company is the largest producer of PVC, and h a s r e c o r d p ro d u c t i o n o f 1 7 0 , 0 0 0 M T, a g r o w t h o f 6 4 % o v e r t h e p r e v i o u s y e a r. Yo u r C o m p a n y a l s o e x p o r t e d P V C t o v a r i o u s a (EDC), arising primarily on account of s ubs tantial incr ease in international Chlorine prices. This put pressure on mar gins throughout the year. However, y o u r C o m p a n y f o l l o w e d c u s t o m e r d r i v e n a n d c u s t o m e r f o c u s s e d m a r k e t i n g r e s u l t i n g i n t h e o v e r w h e l m i n g a c c e p t a n c e o f P V C p r o d u c t s from all segments of pr ocessors. The demand growth is projected at 12% per annum in the t o t a l d o m e s t i c P V C m a r k e t o f over 400,000 MT and your Company expects to maintain its leading position in the industr y. A s y o u a r e a w a re , I n d i a i s a s i g n a t o r y t o G ATT (General Agr eement on Tariffs and Trade) which governs international trade. Under GATT, provision exists for dealing with unfair trad e practices suc h as dumping by off)shor e suppliers of goods. PVC has been a case wher e the anti)dumping provision has been invoked by the Government of India. POL YETHYLENE (PE) A s i a P a c i f i c , S o u t h E a s t Asian and Far East Asian m a r k e t s w h e r e t h e C o m p a n y (cid:146)s p ro d u c t w a s well accepted. The process of expansion and debottlenecking has resulted in increase in PVC p l a n t c a p a c i t y a n d p r o d u c t i o n . Y o u r Operating Profit, Net Profit & Cash Profit Rs. in crores 1200 1000 800 600 400 200 0 89-90 90-91 91-92 92-93 93-94 Operating Profit Net Profit Cash Profit Company has undertaken expansion to increase the existing capacity to a level of 300,000 MT per annum. 1 2 T h e C o m p a n y p ro d u c e d a b o u t 1 3 5 , 0 0 0 M T o f polyethylene during it first f u l l y e a r o f c o m m e r c i a l production. All the grades re q u i r e d b y t h e m a r k e t w e re p ro d u c e d . a n d t h e product quality was well accepted in the market. Inspite of difficult market c o n d i t i o n s , s a l e s k e p t p a c e w i t h p r o d u c t i o n during the major part of the year. In a short span, y o u r C o m p a n y e m e rg e d a s t h e m a r k e t l e a d e r commanding 40% of the market share. P L A S T I C S & P E T R O C H E M I C A L S C O M P L E X L o c a t i o n : H a z i r a , G u j a r a t ( 3 0 0 k m s n o r t h o f B o m b a y ) Ar e a N o . o f e m p l o y e e s Pr o d u c t s M a n u f a c t u re d : 7 0 0 a c r e s : 2862 : P o l y e t h y l e n e Safety Te c h . P a r t n e r s P o l y v i n y l c h l o r i d e M o n o e t h y l e n e G l y c o l E t h y l e n e O x i d e V i n y l C h l o r i d e m o n o m e r : C o m p l e t e d 5 . 5 8 9 M i l l i o n M a n H o u r s w i t h o u t a l o s t t i m e a c c i d e n t B r i t i s h S a f e t y C o u n c i l s F i v e S t a r r a t i n g S h e l l ( N e t h e r l a n d s ) B . F. G o o d r i c h ( U S A ) D u P o n t ( C a n a d a ) L u m m u s C re s t ( N e t h e r l a n d s ) : No. of Customers : 10000 1 3 } I N T E G R AT E D T E X T I L E S C O M P L E X L o c a t i o n Are a N o . o f e m p l o y e e s Pro d u c t s Ma nufa cture d Pro c e s s e s Te c h n o l o g y N o . o f C u s t o m e r : Naro d a , A h m e d a b a d , G u j a r a t ( 5 O O k m s n o r t h o f B o m b a y ) : 1 5 0 a c re s : 6773 : : V i m a l Suiti ngs S h i r t i n g s Dre s s M a t e r i a l s Saris F u r n i s h i n g F a b r i c s ( H a r m o n y ) Te x t u r i s e d / Tw i s t e d / D y e d Ya r n S p u n Ya r n S p i n n i n g , We a v i n g , K n i t t i n g , D y e i n g , F i n i s h i n g , P r i n t i n g , Designing : G e r m a n , J a p a n e s e A n d S w i s s M a c h i n e s : 1 5 0 0 e x c l u s i v e s h o w ro o m s 2 5 , 0 0 0 re t a i l o u t l e t s 3 , 0 0 0 y a r n c u s t o m e r s 1 4 D I R E C T O R S R E P O R T T O T H E S H A R E H O L D E R S 89-90 90-91 91-92 92-93 93-94 Equity Capital, Reserves & Net Worth Rs. in crores 0 5000 4000 3000 2000 1000 d u t y Margins on the sale of polyethylene during the y e a r 1 9 9 3 - 9 4 w e r e adversely affected mainly due to large scale imports at dumped price. An anti)dumping petition h a s b e e n f i l e d w i t h t h e a u t h o r i t i e s i n t h i s regar d , T h e m i s u s e o f t h e Va l u e B a s e d A d v a n c e L i c e n c e ( V A B A L ) l e d t o u n f a i r competition in the market, w i t h i m p o r t s a t n i l d u t y v e r s u s p a i d m a t e r i a l . Yo u r C o m p a n y introduced several new and customised product r a n g e c a t e r i n g t o d i f f e r e n t e n d ) u s e s . T h e n e w product ranges include ultra)stabilized raffia grade, high flow injection moulding grade and high ESCR blow moulding grades. All these have been very well received.To continue the thrust in the market, yo ur Com pany pa rti cipa te d i n (cid:145)(cid:146) P l a s t i n d ia (cid:146)94, the m a j o r i n t e r n a t i o n a l t r a d e f a i r o f t h e p l a s t i c s in dust ry h el d in In dia , Your Co mp a n y received a g o o d re s p o n s e f o r i t s w i d e r a n g e o f p ro d u c t s , process capability and high quality fr om the visitors to the fair which included representatives from the industry in India and abr oad as well the general p u b l i c . Yo u r C o m p a n y (cid:146)s s t a l l s t o o d o u t f o r i t s innovative design and display of product samples. f CHEMICALS DIVISION Linear Alkyl Benzene (LAB) Your Company produced over 77,000 MT of LAB during the year under review, achieving a capacity utilisation of near 100%. With the completion of t h e v e r t i c a l i n t e g r a t i o n t h e C o m p a n y (cid:146) s N o r m a l P a r a f i n re q u i re m e n t w a s entirely met by its o n w p r o d u c t i o n . T h e beg in n ing of the c u r re n t f i n a n c i a l y e a r h a s w i t n e s s e d d e m a n d g r o w t h a n d f i r m i n g u p o f s e l l i n g p r i c e s i n t h e d o m e s t i c a n d i n t e r- y e a r. n a t i o n a l l a t e r h a l f o f t h e t h e which will improve margins.Your Company believes that the demand for LAB would improve during the coming years and to meet t h i s y o u r d e m a n d , C o m p a n y i s p l a n n i n g to expand its LAB c a p a c i t y f r o m 8 0 , 0 0 0 T PA t o 150,000 TPA in phases. Ethylene Oxide (EO) Networth Reserves and Surplus Equity Share Capital Your Company continued to lead the domestic m a r k e t w i t h a 3 1 % s h a re . I t h a s u n d e r t a k e n a c o n t i n u o u s c o s t re d u c t i o n p ro g r a m m e w h i c h i s expected to yield higher contribution and improve overall performance in the current year. T E X T I L E D I V I S I O N T h e C o m p a n y c o n t i n u e d t o l e a d India(cid:146)s largest premium brand t e x t i l e s (cid:147) V I M A L (cid:148) s e g m e n t . T h i s h a s b e e n a c h i e v e d b y f o c u s s i n g o n h i g h v a l u e p r o d u c t s a n d t h e t h e i n s t rengthening of the marketing and distribution n e t w o r k . Yo u r C o m p a n y e m b a r k e d o n a n | e x p a n s i o n a n d | modernisation of i t s e x i s t i n g f a c i l i t i e s a d d i t i o n b y o f 11, 5 0 0 w o r s t e d s p i n d l e s - i n - c r easing t h e t o t a l number of worsted spindles to 24,000, 4 8 h i g h s p e e d s h u t t l e l e s s l o o m s a n d b a l a n c i n g e q u i p m e n t i n t h e p ro c e s s i n g s e c t i o n . W i t h t h i s e x p a n s i o n . t h e C o m p a n y w i l l b e t h e l a r g e s t producer of premium suitings in the country. 1 5 D I R E C T O R S R E P O R T T O T H E S H A R E H O L D E R S The project to manufacture polyester/viscose spun P u r i f i e d Tere p h t h a l i c A c i d ( P TA ) yarn by installing 25000 spindles is on schedule and is expected to be commissioned shortly. Yo u r Company is also setting up a combined cycle gas based 42 MW co)generation Captive Power Plant Your Company is implementing a new 350,000 TPA PTA plant a t H a z i r a which will complement the feed stock requirement t o e n s u r e s t a b i l i t y i n o peratio ns an d reducti on in o ve rall cos ts . Wi th th i s the t o t a l c a p i t a l e x p e n d i t u r e r e a d y a l incurred in the past one year is of the order of R s . 1 5 0 c ro re s which is one of the largest investment by any single c o m p a n y i n t h e t e x t i l e 6000 5000 4000 3000 2000 1000 Gross Block & Net Block Rs. in crores 89-90 90-91 91-92 92-93 93-94 Net Block Gross Block o f t h e n e w p o l y e s t e r c o m p l e x a t H a z i r a a n d also will meet the strong d o m e s t i c d e m a n d . T h e 3 \ j \ n d w i l l r e a p t h e benefits of economies of s c a l e . T h e C o m p a n y w i l l emerge amongst the top f i v e i n t e g r a t e d P TA pro d u c e r s i n t h e w o r l d . sector of this country. The textile demand scenario c o n t i n u e s t o b e s t ro n g a n d f a v o u r a b l e i n t h e do me stic as w el l a s in th e i nte r n a t i on al market. Your Company has further plans to enhance its e x i s t i n g c a p a c i t i e s b y a u g m e n t i n g t h e p re s e n t c apac ity in all it s p rodu ct r an g e s . Your C ompany wi ll co n tin ue to pl ay a key role in t h e t extile field a n d w i l l f u r t h e r i m p ro v e i t s m a r k e t s h a re . T h e o v e r a l l f o c u s . t h e re f o re , w i l l b e o n h i g h v a l u e a d d e d t e x t i l e s f o r d o m e s t i c a s w e l l a s t h e i n t e r n a t i o n a l m a r k e t s . Yo u r C o m p a n y (cid:146)s p ro d u c t range has been well accepted in several overseas markets like the U.K., South Africa and the Middle East. P R O J E C T S NEW POLYESTER COMPLEX In order to main tai n its le a de rs h i p p os i tion in the P o l y e s t e r a n d F i b re I n t e r m e d i a t e s e c t o r s . y o u r Co mpany is s et t in g u p a n ew P olye s te r C omplex at H azira. The n e w P ol ye st e r C om p le x to be built over the next three years will be almost three times a s l a rg e a s t h e C o m p a n y (cid:146)s P a t a l g a n g a C o m p l e x Mono Ethylene Glycol (MEG) T h e C o m p a n y h a s p l a n s to set up a new 1 2 0 , 0 0 0 T PA M E G P r o j e c t a t Hazira as part of its vertical integration strat egy. Since MEG is also a feed stock for the manufacture o f p o l y e s t e r, m o s t o f t h i s w i l l b e c a p t i v e l y consumed in the new polyester complex at Hazira. POY PROJECT T h e 1 2 0 , 0 0 0 T PA p o l y e s t e r y a r n p r o j e c t a t h a z i r a h a s m a d e s u b s t a n t i a l p r o g r e s s . O rders for all equipment have been placed, c ivil a n d m e c h a n i c a l c o n s t r u c t i o n w o r k i s i n progress. Barring u n f o r e s e e n c i r c u m s t a n c e s . t h e p r o j e c t i s l i k e l y t o b e c o m p l e t e d b y e a r l y 1 9 9 5 . b u i l t o v e r t h e l a s t f o u r t e e n y e a r s . T h i s n e w Implementation of these projects will enable your complex will include PTA, MEG, POY, PET Chips and Company to further strengthen its leadership in the PSF plants All these projects will enjoy benefits of m a r k e t a n d m e e t t h e g r o w i n g d e m a n d o f an established iNfrastructure. Polyester Ya r n . 1 6 D I R E C T O R S R E P O R T T O T H E S H A R E H O L D E R S PET CHIPS PROJECT The 80,000 TPA bottle grade P E T C h i p s p ro j e c t a t H a z i r a will be the largest PET plant in the part of the world. T h e c i v i l and me ch an ical con stru ction w or k i s in progress, A l l t h e m a j o r e q u i p m e n t h a v e b e e n o r d e r e d . T h e c o m p l e t i o n o f t h e p ro j e c t i s b e i n g s y n c h r o n i s e d w i t h t h e C o m p a n y (cid:146) s n e w P TA p ro j e c t b e i n g i m p l e m e n t e d a t H a z i r a . P E T bo ttl es ma nufa ctured fr om th e s e P E T Chips will bring about a revolution in the packaging industr y. P o l y e s t e r S t a p l e F i b re ( P S F ) Your Company proposes to set u p a n e w 1 6 0 , 0 0 0 T PA P S F plant at Hazira. The pr oposed project will be the largest in the countr y and will enjoy a n d H o e c h s t C e l a n e s e C o r p o r a t i o n o f U S A f o r s e t t i n g u p a j o i n t v e n t u r e u s i n g H o e c h s t t e c h n o l o g y t o m a n u f a c t u r e Tr e v i r a p o l y e s t e r technical filament yarn in India. Hoechst is the w o r l d l e a d e r i n t h i s f i e l d . T h i s p ro d u c t i s u s e d f o r tyre cords, as reinforcement for conveyor belts, o t h e r r u b b e r g o o d s a n d f a b r i c s f o r i n d u s t r i a l a p p l i c a t i o n s . A j o i n t f e a s i b i l i t y s t u d y h a s b e e n initiated. Each of these Companies will have equal shareholding in the proposed joint venture. NGL/NAPHTHA CRACKER Your company is setting up the w o r l d (cid:146)s l a r g e s t m u l t i f e e d g r a s s r o o t C r a c k e r p r o j e c t , implementation of which is fast progr essing. All l o n g d e l i v e r y e q u i p m e n t , b o t h i m p o r t e d a n d i n d i g e n o u s h a v e b e e n o r d e r e d , c i v i l a n d m e c h a n i c a l c o n s t r u c t i o n c o n t r a c t s h a v e b e e n entered into piling work has been completed and bulk material like cement and construction steel has been received at site. The pr oject is expected to be completed by the first half of 1996. T h e c r a c k e r p r o j e c t w i l l p r o d u c e 7 5 0 , 0 0 0 T PA o f e t h y l e n e , 3 6 5 , 0 0 0 T P A o f polypropylene, 235,000 TPA of benzene, 1 9 7 , 0 0 0 T PA o f t o l u e n e a n d 1 0 0 , 0 0 0 T P A o f be nef it s of e con om ie s of scal e. W i th th is project, x y l e n e s . T h e C r a c k e r p ro j e c t w i l l c o m p l e t e t h e your Company will more than double its production c a p a c i t y w h i c h w i l l e n a b l e i t t o re m a i n a s t h e lea di ng m arket s upp li er. On completion o f a l l t h e n e w p o l y e s t e r p ro j e c t s , y o u r C o m p a n y w i l l have a total polyester installed capacity of over 500,000 TPA and will be among the top 5 p o l y e s t e r p r o d u c e r s i n t h e world. C o m p a n y (cid:146) s b a c k w a r d integration of its Polymer business. T h e e n t i r e c r a c k e r o u t p u t w i l l b e c a p t i v e l y consumed by the company and its G r o u p Companies. Captive Power Plants (CPP) Jo i nt Ven ture w ith H oechs t Your Company is in the process of expanding the Yo u r C o m p a n y h a s s i g n e d a M e m o r a n d u m o f captive power capacity at Hazira as well as setting Understanding (MOU) with Hoechst AG of Germany u p n e w c a p t i v e p o w e r p l a n t s a t N a ro d a a n d 1 7 1 8 D I R E C T O R S R E P O R T T O T H E S H A R E H O L D E R S P a t a l g a n g a . T h i s w i l l e n s u r e s e l f s u f f i c i e n c y, e x p l o r a t i o n f o r t h e p r o v e n P a n n a & M u k t a o i l reliable & stable supply of energy requirement and reserves and Tapti gas reser ve has been given by optimum utilisation of generated steam at low cost. the G o v e r n m e n t o f I n d i a t o a n u n i n c o r p o r a t e d O n c o m p l e t i o n , t h e s e pla nts will add a tot al of 1 5 0 M W o f p o w e r, i n c r e a s i n g t h e t o t a l i n s t a l l e d c a p t i v e p o w e r p l a n t c a p a c i t y t o 2 5 0 M W. A l l m a j o r o rd e r s h a v e b e e n p l a c e d a n d c i v i l c o n s t r u c t i o n w o r k h a s c o m m e n c e d . T h e e n t i re 35 30 25 20 15 10 5 0 EPS & CEPS In Rs . CEPS EPS 89-90 90-91 91-92 92-93 93-94 j o i n t v e n t u r e b e t w e e n your Company, Enron and O N G C , w h e r e i n y o u r Company will have a 30% s h a r e. T h i s b u s i n e s s w i l l be run as an independent division of the Company. This venture is estimated t o c o s t R s . 3 8 0 0 c ror e s , a n d t h e s h a r e o f y o u r Company will be Rs.1140 c r o r e s . N e c e s s a r y 250 MW will become operational in the year 1994/1995. agre e m e n t s w i t h t h e G o v e r n m e n t o f I n d i a a n d among the partners themselves are expected to be Caustic Chlorine ProJect Your Company proposes to set up India(cid:146)s largest Caustic Chlorine plant with a capacity of 198,000 TPA c h l o r i n e a n d 2 3 4 , 0 0 0 T PA caustic soda plant at Hazira f o r the m an uf acture of Et hyl ene D i )C h lor i d e ( EDC). a f e e d s t o c k f o r i t s e x i s t i n g P V C m a n u f a c t u r i n g facility at Hazira. With this project, your Company will complete the backward integration and avoid dependence on imported EDC, The entire chlorine production will be captively consumed and the by pro du c t c aust ic wi ll b e sold in t h e market. T his production of chlorine will be used with ethylene to produce EDC. Effective steps have been taken for implementation of this project. OIL & GAS DIVISION Your Company is the first private sector company to be awarded the medium sized discovered oil and gas fields for exploration and production. The oil and g as re s er v es in th es e fi eld s a s es ti mated by the Ministr y of Petroleum & Natural Gas ar e 265 million barrels and 67 million c u b i c m e t e r s . T h e c o n t r a c t f o r o i l finalised shortly. NEW COMPANIES Reliance Petroleum Ltd. Your Company pr omoted Reliance Petroleum Ltd. which successfully completed its Rs. 2172 cror e public issue of Triple Option Convertible Debenture (TOCDs). The project was appraised by IDBI for its techno-commer cial viability. The entire means of finance for the project of Rs. 5142 crores has been completely tied up. Your Company has made further pr ogress towards implementation of its 9 million T PA refiner y. Yo u r Company has already acquired 2200 acres of land. All suitable arrangements for water and power for the project are in place. P ro j e c t i m p l e m e n t a t i o n i s a s s c h e d u l e d . O n commissioning, it will be\j\h is e x p e c t e d t o s a v e p r e c i o u s foreign exchange to the tune of Rs. 6600 crores per annum o n t h e i m p o r t o f r e f i n e r y p roducts. 1 9 D I R E C T O R S R E P O R T T O T H E S H A R E H O L D E R S International Issues I n M a y (cid:146) 9 2 y o u r C o m p a n y p i o n e e re d t h e c o u n t r y(cid:146)s f i r s t International Offering in the f o r m o f G l o b a l D e p o s i t o r y Receipts (GDR). The issue was for USD 1 5 0 m i l l i o n ( R s . 4 5 7 c ror e s ) . I n N o v. (cid:146) 9 3 y o u r Particular in the Report of Board of Directors) Rules, 1988 regarding conser vation of energy, technology a b s o r p t i o n a n d f o re i g n e x c h a n g e e a r n i n g s a n d outgo is given in the Annexure forming part of this report. SU B SIDI ARY COM PAN IES As re q u i re d u n d e r S e c t i o n 2 1 2 o f t h e C o m p a n i e s A c t , 1 9 5 6 , t h e a u d i t e d s t a t e m e n t s o f a c c o u n t s , Company made the first ever largest private sector alongwith the report of the Boar d of Directors of Euro Convertible Issue aggregating to USD 140 million (Rs. 440 crores). The convertible issue was pri m aril y us ed for p re pa ym ent /re p a ym ent of the D e v t i F a b r i c s L i m i t e d , R e l i a n c e I n d u s t r i a l Investments & Holdings Limited (formerly known as Trishna Investments and Leas ings L imited) and Reliance Petro p roducts Limited and the respective Company(cid:146)s high cost debt. The equity share capital Auditors Report thereon for the year end ed 31st and sh are pr e mi um w ill s ta nd i n c re a s e d by Rs. 15 March, 1994, are annexed. crores & Rs. 424 crores respectively in the event of the Euro bonds shareholders opting for conversion. In Feb (cid:146)94 the Company made the single largest GDR issue of 12,766,000 GDRs aggregating t o U S D 3 0 0 m i l l i o n ( R s . 9 4 1 crores).Your Company has till n o w r a i s e d U S D 5 9 0 m i l l i o n i n 3 ( R s . 1 8 3 7 c r o r e s ) i n t e r n a t i o n a l o f f e r i n g s , t h e l a rg e s t t o t a l b y a n y s i n g l e company. The ma rket cap ita lis ati on of the GDRs and Euro Convertible Bonds, as on date. is o f th e o rde r of R s. 2123 cror es . Th i s is by far the hi ghes t amon g a ll th e E uro Is s ue s f rom I ndia. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE R e d w o o d I n v e s t m e n t s L t d . , a s u b s i d i a r y o f t h e C o m p a n y, a m a l g a m a t e d w i t h e f f e c t f r o m 1 s t J a n u a ry, 1 9 9 4 w i t h S a n d o z Te x t i l e s a n d Tr a d i n g Limited. The amalgamation scheme has since been approved by the Hon(cid:146)ble Bombay High Court. FIXED DEPOSITS Deposits of Rs. 1.02 crores due for r epayment on or before 31st March, 1994 were not claimed by I,716 depositors as on that date. Of these, deposits amounting to Rs. 0.46 crore of 754 d e p o s i t o r s h a v e s i n c e b e e n repaid/renewed. P E R S O N N E L A s r e q u i r e d b y the provisions of section 217 (2A) of the Companies I n f o r m a t i o n i n a c c o r d a n c e w i t h A c t , 1 9 5 6 , re a d w i t h C o m p a n i e s ( P a r t i c u l a r s o f Employees) Rules, 1975, as amended. the names and other particulars of the employees are set out the provisions of in the Annexure to the Directors(cid:146) Report in the full Section 217(1)(e) of the Companies A c t , 1 9 5 6 , re a d Balance Sheet and Profit and Loss A ccou nt. D I R E C T O R S S h r i D h i r u b h a i H . A m b a n i , S h r i R a m n i k b h a i H . w i t h C o m p a n i e s A m b a n i a n d S h r i N a t u b h a i H . A m b a n i re t i r e b y ( D i s c l o s u r e s o f rotation and being eligible. offer themselves for reappointment . 2 0 A N N E X U R E T O D I R E C T O R S R E P O R T Book Value In Rs . INDUSTRIAL RELATIONS The Company continues its belief in preventive and pre dic tive ind us trial rel ati on s a n d h a s developed e a c h o f i t s l i n e s u p e r v i s o r s t o b e a n I n d u s t r i a l Relations Manager to his team. During the period, i n d u s t r i a l re l a t i o n s h a v e b e e n e x t r e m e l y c o r d i a l , t h e m a n a g e m e n t a n d tha nks all t he e mp loye e s f o r c o n t i n u e d c o n t r i b u t i o n t o w a rd s t h e t h e g r o w t h organisation. 140 120 t h e i r o f 100 80 60 A N D A U D I T O R S AUDITORS(cid:146) REPORT Messrs Chaturvedi & Shah, Messrs Rajendra & Co. and Messrs Rajagopalan & Co., A u d i t o r s o f t h e C o m p a n y, h o l d o f f i c e u n t i l t h e conclusion of the ensuing Annual General Meeting. T he Com pa ny h as recei ve d le tt e r s on ly from two of them, namely Messrs Chaturvedi & Shah and M e s s r s R a j e n d r a & C o . . t o t h e e f f e c t t h a t t h e i r a p p o i n t m e n t , i f m a d e , w o u l d b e w i t h i n t h e prescribed limits under Section 224 (1)B) of the Companies Act, 1956. Accordingly, the said two auditors will be appointed a s a u d i t o r s o f t h e C o m p a n y a t t h e e n s u i n g Annual General Meeting. The notes to the accounts r e f e r r e d t o i n t h e A u d i t o r s (cid:146) R e p o r t a r e s e l f e x p l a n a t o r y a n d , t h e re f o re d o n o t c a l l f o r a n y further comments. ACKNOWLEDGEMENT Your Directors would like t o e x p re s s t h e i r g r a t e f u l t h e a p p r e c i a t i o n f o r a s s i s t a n c e c o o p e r a t i o n re c e i v e d f ro m a n d the Financial Institutions and the Banks, during the year under review. Yo u r D i r e c t o r s w i s h t o p l a c e o n r e c o r d t h e i r o f t h e d e v o t e d s e r v i c e s o f t h e E x e c u t i v e s , S t a f f a n d d e e p a p p r e c i a t i o n s e n s e f o r Workers of the Company for its success. For and on behalf of the Board of Directors DH IRUB HA I H. AM B AN I Ch airman & Managing Dir ector Bombay Dated: 11th J u l y. 1 9 9 4 89-90 90-91 91-92 92-93 93-94 ANNEXURE TO DIRECTORS(cid:146) REPORT PART ICU LARS REQUIR ED UNDER THE COMPANIES ( D I S C L O S U R E S O F PA R T I C U L A R S I N T H E R E P O R T O F B OARD OF DIRECTORS) RULES, 19 88 A. CONSERVATION OF ENERGY c o o l i n g t o w e r f a n s t h e re b y o p t i m i s i n g e n e r g y (a) Energy Conser vation Measures taken :- P TA Plant excess steam utilisation in PFY and LAB Plants. C o o l i n g t o w e r m a k e u p d i re c t l y b e i n g d o n e usage. 6 7 8 P a rex Unit zone ratio adjustments to reduce energy consumption and / or desorbent losses. Reorientation of steam traps to s ave steam in P V C p l a n t. U t i l i s a t i o n o f L P s t e a m i n d i r t y c o n d e n s a t e avoiding double pumping cost within the plant. drum for impurities removal in MEG plant. Int eg rati on of fue l g as sys t e m for the entire 9 Oxy Reactor and incinerator blowdown recycled complex resulting in saving of 5000 tons of with condensate in VCM plant. fuel. 10 U s e o f b y p ro d u c t B u t e n e ) I I a s f u e l i n f i r e d Utilisation of low pressure steam into vapor h e a t e r s t h e r e b y r e d u c i n g f u e l g a s absorption chiller for refrigeration purpose. consumption. P L C b a s e d a u t o s t a r t / s t o p i m p l e m e n t e d f o r 11 Use of pressure pumping trap for recovering . 2 1 1 2 3 4 5 A N N E X U R E T O D I R E C T O R S R E P O R T steam condensate from reslurry water heater in HDPE plant. 12 Detection of faulty team traps on line by using portable electronic device and rectifying the same. 13 Condensate and flash steam of VAC units used as feed water to Boilers. 14 D M W a t e r d r a i n e d f r o m w a t e r j e t l o o m s recovere d , t re a t e d a n d u s e d a s B o i l e r f e e d . 15 P r o c u r e d o n e n u m b e r h i g h l y e f f i c i e n t , modulating gas cum oil fired Combimax steam boiler and commissioned the same in place of existing old package boiler. 16 R e p l a c e m e n t o f o l d i n e f f i c i e n t re f r i g e r a t i o n and air conditioning plants by new efficient plants for spinning & sulzer departments. ( b ) Additi onal inve stmen ts an d p ro posals, if any being implemented for reduction i n c o n s u m p t i o n o f e n e rg y : 1 2 3 4 I n s t a l l a t i o n o f a d d i t i o n a l v a p o u r a b s o r p t i o n chiller for low pressure steam utilisation in fibr e plants. Tr i a l s w i t h X R G f u e l a d d i t i v e s f o r e n s u r i n g optimum efficiency of LAB furnaces. Replacement of air preheater in LAB hot oil heater. Replacement of combined feed exchanger in L A B P a c o l U n i t b y e f f i c i e n t p l a t e t y p e exchanger. 5 O p t i m i s a t i o n o f re c y c l e p a r a f f i n p u m p i n g 6 7 8 9 c o l u m n o p e r a t i o n s system. Advanced simulation package for optimizing f o r d i s t i l l a t i o n Petrochemical Plants. I m p e l l e r t r i m m i n g i n h y d ro c a r b o n s e c t i o n pumps will result in substantial energy saving. Conversion of existing totally condensing type stea m tur bine t o e xtr act ion ty pe . Utilisation of lighter fuel than LSHS/FO having higher calorific value and lesser pollutants in exhaust gases. 10 Integration of steam at all levels across the RIL Complex. 11 Recovery of steam condensate in PVC plant. 12 M o d i f i c a t i o n s f o r u t i l i s i n g L P s t e a m i n deh ydrat or re boil er o f MEG p l an t . 13 Utili sin g th e w as te cold in e t h yl e n e terminal by generation of chilled water for use In PVC plant. 14 Pro j e c t w o r k f o r i n s t a l l a t i o n o f 4 2 M W g a s bas ed comb in ed cycl e co -g en er a ti on power plant is in full swing. 2 2 ( c ) I m p a c t o f m e a s u r e s a t ( a ) a n d ( b ) above f o r re d u c t i o n o f e n e r gy c o n s u m p t i o n and on the cost of production of goods. 1 2 3 4 5 6 7 8 9 B y u t i l i s i n g e x c e s s s t e a m f ro m P T A P l a n t resulting in saving of Rs. 182 lakhs per year in terms of fuel oil. T h e u s e o f X R G f u e l a d d i t i v e w i l l re s u l t i n saving of Rs. 25 90 lakhs per annum in te rms of fuel oil. B y r e p l a c i n g e x i s t i n g C o m b i n e d F e e d E x c h a n g e r i n L A B P a c o l U n i t w i l l re s u l t i n saving of Rs.220 lakhs per annum in terms of fuel oil. B y c h a n g i n g r e c y c l e p a r a f f i n o v e r h e a d pumping system will result in saving of Rs.7.68 lakhs per annum in terms of power only. Rerun column optimization will result in saving of utilities worth Rs. 128 lakhs per annum. Vapor Absorption Chiller installation in PTA will result in saving Rs.55 lakhs in power. I m p e l l e r t r i m m i n g f o r h y d r o c a r b o n s e r v i c e pump can save Rs. 5 lakhs per annum worth of electrical power. P a rex Unit zone ratio adjustment will ensur e saving of desorbent worth Rs. 136 lakhs per annum with the same energy r equirements. S p e c i f i c c o n s u m p t i o n o f s t e a m r e d u c e d significantly (0.97 to 0.92 MT/MT PVC) in PVC plant. 10 Reduction in consumption of HP steam by 6 TPH and utilisation of waste/vented steam in MEG plant. 11 V C M p l a n t e f f e c t e d 1 . 8 T P H o f D M w a t e r s a v i n g s a n d 0 . 1 3 M M K C a l / h r o f e n e r g y savings due to blowdown recover y. 12 Use of Butene)II is expected to result in fuel gas saving to the extent of 500 KSM3 per year. 13 Utilising waste cold from ethylene terminal to g e n e r a t e c h i l l e d w a t e r w i l l re s u l t i n a n e t saving in electrical energy by about 27 lakh units per annum. 14 Consumption of coal is totally stopped from 3080 MT in 92 ) 93 to nil in 93 94 d ue to installation of gas fire thermopacks in place of coal fired ones. 15 P o w e r c o n s u m p t i o n f o r r e f r i g e r a t i o n a n d airconditioning is reduced due to installation of (a) steam operated vapour absorption chiller o f 3 8 0 T R i n p l a c e o f e l e c t r i c a l o p e r a t e d compressor in water jet looms and (b) new efficient chilling plants in place of old ones in spinning / sulzer departments. A N N E X U R E T O D I R E C T O R S R E P O R T FORM (cid:145)A 2. C O A L (cid:146)Form for disclosure of particulars with respect to Conservation of Energy PART (cid:145)A(cid:146) Power & Fuel Consumption 1. Electricity April (cid:146)93 to March(cid:146)94 April (cid:146)92 to March(cid:146)93 Q u a n t i t y ( To n n e s ) ) To t a l C o s t ( R s . i n c rore s ) ) A v e r a g e R a t e p e r M T ( R s . ) ) --- --- --- 3 0 8 3 . 0 0 0 . 5 5 1 7 8 0 . 0 8 3. FURNACE OIL a) Purchased Units (Lacs) 3621.18 3518.14 Q u a n t i t y ( K L t r s . ) 2 2 9 4 3 7 . 2 9 2 1 9 0 7 8 . 0 7 Total Cost (Rs. in crores) 94.15 81.11 To t a l C o s t ( R s . i n c ror e s ) 1 1 5 . 3 4 1 0 1 . 8 4 Rate/Unit (Rs.) 2.60 2.31 A v e r a g e R a t e p e r L t r. ( R s . ) 5 . 0 3 4 . 6 5 b) Own Generation 1) Through Diesel Generator 4. L D O Units (Lacs) 506.75 414.89 Q u a n t i t y ( K L t r s . ) 1 4 6 9 3 . 7 8 7 9 . 0 0 Units per Ltr of Fuel Cost/Unit (Rs.) 3.51 2.66 3.47 1.94 To t a l C o s t ( R s . i n c ror e s ) R a t e / U n i t p e r L t r. ( R s . ) 8 . 3 0 5 . 6 5 0 . 0 4 4 . 8 6 2) Through Steam Turbine/Generator 5. OTHERS G A S Units (Lacs) 6487.78 6270.94 Units per unit of Fueloil/gas 3.63 Cost/Unit (Rs.) 1.32 3.07 1.18 Q u a n t i t y ( 1 0 0 0 M 3) 5 4 1 0 5 . 0 0 4 1 6 1 2 . 0 0 To t a l C o s t ( R s . i n c ror e s ) 1 0 . 7 9 8 . 4 8 R a t e / U n i t p e r 1 0 0 0 M 3 ( R s . ) 1 9 9 4 . 2 1 2 0 3 8 . 8 6 Part (cid:145)B(cid:146) Consumption per Unit of Production FABRICS Per 1000 Mtrs. Current Year PFY Per MT PSF Per MT PTA Per MT LAB Per MT Previous Current Previous Current Previous Current Previous Current Previous Year Year Year Year Year Year Year Year Year MEG Per MT Current Previous Year Year PVC Per MT Current Previous Year Year HDPE Per MT Current Previous Year Year Electricity (KWH) Furnace Oil (Ltrs) Coal (Kgs) Gas (SM3) LSHS (Kgs) 1010 6 --- 406 6 954 7 63 343 4 1317 169 --- --- 24 1446 110 --- --- 100 700 177 --- --- 26 709 108 --- --- 99 375 11 --- --- 145 405 126 --- --- 32 348 336 --- --- 32 373 140 --- --- 240 893 --- --- 18 --- 1244 --- --- 1 --- 454 --- --- 126 --- 602 --- --- 124 --- 252 Being --- Comm. --- 41 --- Note: The above figures indicate only the direct consumption and exclude consumption of power and fuel in the supporting utilities. B. TECHNOLOGY ABSORPTION F O R M (cid:145) (cid:146) B (cid:146)(cid:146) F o r m f o r d i s c l o s u re o f p a r t i c u l a r s w i t h re s p e c t t o : Researc h and Development ( R&D) 1 . S p e c i f i c a re a s i n w h i c h r e s e a r c h a n d development (R&D) is being carried out by the Company. i) Development of low denier per filament p o l y e s t e r y a r n t o p e r f o r m b e t t e r a l t texturiser/ Draw twister end. ii) Development of special grade polyester s t a p l e f i b re w i t h i m p ro v e d d y e a b i l i t y a n d better processability. ill) Reduction in the consumption of chemicals / a d d i t i v e s / c a t a l y s t i n P e t r o c h e m i c a l Processes. iv) R e s e a r c h a n d D e v e l o p m e n t a c t i v i t y i s m a i n l y c o n c e n t r a t e d i n t h e f i e l d o f Polyester Filament Yarn. Polyester Staple Fibre. Purified Terephthalic Acid and Linear A l k y l B e n z e n e . T h e s t re s s h a s b e e n o n p r o c e s s p r o c e s s m o d i f i c a t i o n , d e v e l o p m e n t , p r o d u c t d e v e l o p m e n t , energ y conser vation, import substitution and technology upgradation. 2 3 A N N E X U R E T O D I R E C T O R S R E P O R T v) D e v e l o p m e n t o f d e i o n i s a t i o n p r o c e s s f o r vii) p u r i f y i n g re s i d u e s t re a m i n M E G p l a n t . Improvement in quenching system thereby reducing the variation in Polyester Y a r n Quality. vi) Improvement in flow behaviour for injection moulding grades of HDPE. vii) Development of low MFI pipe grades meeting IS requir ement of HDPE. viii) Development of supergloss high ESCR and GP blow moulding grades of HDPE. viii) D e v e l o p m e n t o f n e w c o n f i g u r a t i o n f o r s p i n n e re t t e s f o r 2 . 5 D e n i e r Tr i l o b a l t o achieve better utilisation of polymer. ix) I m p ro v e m e n t o f L A B q u a l i t y i n t e r m s o f a c i d w a s h c o l o u r, n ) L A B c o n t e n t a n d bromine index. ix) Improvement of solvent recover y from finishing areas in HDPE plant. x) Improvement of heavy kerosene quality by tre a t m e n t w i t h F u l l e r (cid:146)s e a r t h . x) D e v e l o p m e n t o f u p h o l s t e r y f a b r i c s u s i n g polypropylene fibres in the pile. xi) D e v e l o p m e n t o f m e n s w e a r a n d f u r n i s h i n g f a b r i c u s i n g j u t e f i b r e a s o n e o f t h e components in the blended yarn. x i i ) P r o c e s s i n g o f l o w d e n i e r p e r f i l a m e n t s u b s e q u e n t m i c r o ) f i l a m e n t development of the fabrics made out of such yarn. y a r n a n d 2. B e n e f i t s d e r i v e d a s a re s u l t o f t h e above R&D xi) Development of solid catalyst for alkylation reactions. x i i ) R e c y c l e o f w a t e r i n P TA p u r i f i c a t i o n section. xiii) Quality improvement of HDPE IM grades to suit moulded luggage market. xiv) Marketing of tailor made supergloss high ESCR and GP moulding grade of H DPE . xv) Marketing of HDPE pipe grade meeting IS requirement. xvi) Improved solvent recover y by providing settling tanks / coalescer in r ecirculation loop in HDPE plant. xvii) D e v e l o p e d n e w r a n g e o f u p h o l s t e r y a ) Product Development/Improvement fabrics. i) New low denier per filament yarns have been developed viz., 68/68/POY. 86/47/ POY, 110/68/POY, 50/27/TLBR/FLAT and 5 0 / 2 7 / T L B R / P O Y. B e t t e r p e r f o r m a n c e a t Te x t u r i s e r / D r a w t w i s t e r s h a s b e e n achieved ii) Process developed for 115/34/POY with r a d i a l q u e n c h u n i t f o r d r a w t e x t u r i s i n g end use. iii) Ne w prod ucts li k e 155/3 4/ SD/ POY. 310/ 6 8 / S D / P O Y 2 5 5 / 3 4 / S D / P O Y d e v e l o p e d a n d b u l k p ro d u c t i o n o f 1 5 5 / 3 4 / S D / P O Y and 310/68/POY established. iv) A special denier 260/68/POY developed for export. v) Development of micro denier staple fibre. vi) Production of special dyeing grade fibr e ((cid:145)Z(cid:146) merge) to get higher packing density in dy e ve sse l in th e tex tile m i ll . 2 4 xviii) I m p r o v e d f e e l , h a n d l e d r a p e a n d a p p e a r a n c e o f 1 0 0 p o l y e s t e r d r e s s materials and sarees. (b) I m p o r t S u b s t i t u t i o n i) I n d i g e n i s a t i o n o f s p a re s / c h e m i c a l s / additives for the Petr ochemical and Fibr e Division. ii) I n d i g e n o u s S i l i c o n s S p r a y a n d development. j e t iii) Use of coating agent prepar e d i n ) h o u s e , i n p l a c e o f i m p o r t e d v a r i e t y i n P V C production. iv) I n d i g e n i s a t i o n o f s o l v e n t s u c c e s s f u l l y accomplished by VCM plant. v) Incinerator expansion bellow indigenised A N N E X U R E T O D I R E C T O R S R E P O R T in VCM plant. vi) Use of in dig en ous S ilica M B for LD films i n H D P E p l a n t vii) Indigenisation of CAST MB in HDPE plant . 3 . F u t u re P l a n o f A c t i o n : P ro j e c t s a re p ro p o s e d f o r t h e f o l l o w i n g : i) D e v e l o p m e n t o f s p e c i a l i t y m i c ro d e n i e r filament yarn. ii) Development of octolobal profile filament yarn for special effects . iii) Development of process for various chips source suitable for spin draw yarni xvi) I n c r e a s e i n E D C c r a c k i n g f u r n a c e r u n length in VCM plant. xvii) I n c r e a s i n g b y p r o d u c t a q u e o u s H c l c o n c e n t r a t i o n f r o m 1 8 % t o 3 3 % a n d anhydrous quality. xviii) P a r a l l e l d e c o k i n g o f E D C c r a c k i n g furnaces. x i x ) R e u s e o f w a s t e w a t e r g o i n g f ro m V C M Plant to Effluent Treatment Plant x x ) U t i l i s a t i o n o f e t h y l e n e v e n t f ro m H D P E p l a n t f o r u s e a s f u e l i n E D C c r a c k i n g furnaces x x i ) Use of new catalyst Oxy-VIII for enhancing efficiency of EDC pr oduction. xxii) Use of NGL in place of HSD as fuel in Gas Turbines resulting in reduction of power generation cost. iv) Development of new spin finish for better performance. xxiii) Recover y of lube oil from the oil console vent of gas turbines in HDPE plant. v) Modification in TiO2 slurry pr eparation to i m p rove TiO 2 d ispe rs ion in ya rn. xxiv) Use of more economical TIBA catalyst as substitute. vi) On line Tension (OLT) measurement system for monitoring texturising tensions. vii) Installation of mechanical seal on finisher t o m i n i m i s e a i r l e a k s a n d t o i m p r o v e polymer quality. viii) B e t t e r p r o c e s s a b i l i t y b y i n t r o d u c i n g continuous polymer filter device. ix) I n s t a l l a t i o n o f d o f f t i m e r f o r u n i f o r m package weight: x) Auto doffing system and bobbin handling s y s t e m f o r P O Y. xxv) In -house development of Silica / CAST MB . xxvi) E s t a b l i s h m e n t o f P o l y m e r C e n t re f o r application testing on site. xxvii) Debottlenecking of solvent loop of HDPE plant has been done for stability of system & i s b e i n g debottlenecked for capacity enhancement. I P S o v e r h e a d s y s t e m xxviii) Development of the total manufacturing p r o c e s s o f f i t d y e d p o l y e s t e r- c o t t o n m e n s w e a r s u i t i n g u s i n g i n d i g e n o u s cotton. xi) In st allat ion of 20 k g p ack a g e winder on spinning machine. xxix) x i i ) Recover y of flash steam presently being v e n t e d i n P V C p l a n t . xii i) R ecov er y of eth y le ne from process vent gas of MEG plant. xiv) Debottlenecking of VCM/PVC plants being executed x v ) Advanced control for plant automation for the above . F i n i s h i n g o f m e n s w e a r i m p r o v e d international acceptance l e a d i n g t o f a b r i c h a n d a n d b e t t e r xxx) Development of new finish for upholstery generating static charge. xxxi) D e v e l o p i n g f i r e ) r e t a r d a n t f u r n i s h i n g fabrics including upholstery and aviation seat cover. 2 5 A N N E X U R E T O D I R E C T O R S R E P O R T 4. E x p e n d i t u re o n R & D ( R s . i n C r s . ) (a) Capital ( b ) Recurring (c) Total ( d) To ta l R & D e xp en ditu re as p e rcentage of total turnover 0.28 10.67 10.95 0.2% Tec hnol o gy a bso r pti on, ada p ta t i o n and innovation. E f f o r t s i n b r i e f , m a d e t o w a rd s t e c h n o l o g y a b s o r p t i o n a d a p t a t i o n a n d i n n o v a t i o n a n d b ene fits derive d as a re sul t t h ere of: i x x E O C o l u m n d e b o t t l e n e c k e d t o p r o d u c e higher EO pr oduction. Cooling medium in jackets of PVC plant p o l y r e a c t i o n o f o n e l i n e c h a n g e d o v e r fr o m c o o l i n g w a t e r t o c h i l l e d w a t e r t o i n c r e a s e A d d i t i o n a l p r o d u c t i v i t y. refrigeration units installed to make similar change in second line. x i New EO column being put to enhance EO capacity. xii D E G t o T E G c o n v e r s i o n s c h e m e u n d e r implementation. xiii P V C S y s t e m - I I P n e u m a t i c C o n v e y i n g System debottlenecked. xiv I n t e r n a l s o f P V C s l u r r y s t r i p p i n g c o l u m n being changed to incr ease the capacity. C. FOREIGN EXCHANGE EARNINGS AND O U T G O : 1 Microdeniers in filament yarn for special fabric feel . i i i i i Polyester Staple Fibre for higher dyeability and ease of processing. R e d u c t i o n i n s p e c i f i c c o n s u m p t i o n o f catalyst and additives in petrochemical and f i b re a re a , iv New spin finishes for specific end use of polyester staple fibre and polyester filament yarn. a) b) v Reduction in DM Water consumption in PTA Plant by recycling water s t ream. vi Utilization of low pressur e steam for vapour absorption chiller. i A c t i v i t i e s r e l a t i n g t o e x p o r t s . i n i t i a t i v e s t o i n c r e a s e e x p o r t s , d e v e l o p m e n t s o f n e w exports market for pr oducts and ser vices a n d e x p o r t p l a n . i i Total foreign exchange used and earned. Total foreign exchange earned (Rs.in Crs) 77.11 Total savings in for eign exchange thr ough products manufactured by the Company and deeme dexports 2852.89 vii Consistency in G Monomer Injection rate. S u b To t a l ( a + b ) 2930.00 viii I m p r o v e m e n t i n T i t a n i u m d i o x i d e distribution in polymer, fibr e and filament. c) Total foreign exchange used 894.52 2 6 A U D I T O R S R E P O R T To the Members of RELIANCE INDUSTRIES LIMITED ANNEXURE TO AUDITORS(cid:146) REPORT We have audited the attached Balance Sheet of RELIANCE INDUSTRIES LIMITED as at 31st March, 1994 and the Profit a n d L o s s A c c o u n t o f t h e C o m p a n y f o r t h e y e a r e n d e d o n t h a t d a t e a n n e x e d t h e re t o a n d re p o r t t h a t : 1. A s r e q u i r e d b y t h e M a n u f a c t u r i n g a n d O t h e r C o m p a n i e s A u d i t o r s (cid:146) R e p o r t ) O rd e r, 1 9 8 8 , i s s u e d b y the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956 we give in the Annexure h e re t o a s t a t e m e n t o n t h e m a t t e r s s p e c i f i e d i n p a r a g r a p h s 4 a n d 5 o f t h e s a i d O rd e r. 2. F u r t h e r t o o u r c o m m e n t s i n t h e A n n e x u re re f e r red t o i n p a r a g r a p h 1 a b o v e , w e s t a t e t h a t : a ) We h a v e o b t a i n e d a l l t h e i n f o r m a t i o n a n d e x p l a n a t i o n s w h i c h t o t h e b e s t o f o u r k n o w l e d g e a n d b e l i e f w e re n e c e s s a r y f o r t h e p u r p o s e s o f o u r a u d i t . b ) c ) d ) I n o u r o p i n i o n , p ro p e r b o o k s o f a c c o u n t , a s r e q u i r e d b y l a w h a v e b e e n k e p t b y t h e C o m p a n y , s o f r o m o u r e x a m i n a t i o n o f s u c h b o o k s . f a r a s a p p e a r s T h e B a l a n c e S h e e t a n d P ro f i t a n d L o s s A c c o u n t re f e r re d t o i n t h i s re p o r t a re i n a g re e m e n t w i t h t h e b o o k s o f a c c o u n t . F o r t h e re a s o n s m e n t i o n e d i n n o t e N o . 1 ( F ) o f S c h e d u l e (cid:145) N (cid:146) t o t h e A c c o u n t s , t h e i t e m s o f I n c o m e a n d E x p e n d i t u r e m e n t i o n e d t h e re i n c o n t i n u e t o b e a c c o u n t e d f o r o n c a s h b a s i s . S u b j e c t t o t h e a b o v e , i n o u r o p i n i o n a n d t o t h e b e s t o f o u r i n f o r m a t i o n a n d a c c o rd i n g t o e x p l a n a t i o n s g i v e n t o u s , t h e s a i d B a l a n c e S h e e t a n d Pr o f i t a n d L o s s A c c o u n t re a d t o g e t h e r w i t h t h e o t h e r n o t e s t h e re o n g i v e t h e information requir ed by the Companies Act, 1956, in the m a n n e r s o required and give a true and fair view: a ) b ) i n s o f a r a s i t re l a t e s t o B a l a n c e S h e e t o f t h e state of affairs of the Company as at 31st March, 1994 and i n s o f a r a s i t re l a t e s t o t h e P r o f i t a n d L o s s A c c o u n t , o f t h e Pro f i t o f t h e C o m p a n y f o r t h e y e a r e n d e d o n t h a t d a t e . For CHATURVEDI & SHAH For R A J E N D R A & C O . Chartered Accountants Chartered Accountants D . C H AT U RV E D I Partner R . J . S H A H Partner For RAJAGOPALAN & CO. Chartered Accountants Bomb ay Dated: 1 1 t h J u l y, 1 9 9 4 D R. R . R A J A G O PALAN Partner R e f e r re d t o i n p a r a g r a p h I o f o u r re p o r t o f e v e n d a t e 1. T h e C o m p a n y h a s m a i n t a i n e d p ro p e r r e c o rd s s h o w i n g f u l l p a r t i c u l a r s i n c l u d i n g q u a n t i t a t i v e d e t a i l s a n d s i t u a t i o n o f f i x e d a s s e t s o n t h e b a s i s o f i n f o r m a t i o n a v a i l a b l e e x c e p t i n re s p e c t o f c e r t a i n i t e m s o f f u r n i t u re a n d f i x t u re s . A c c o rding t o t h e i n f o r m a t i o n a n d e x p l a n a t i o n s g i v e n t o u s m o s t o f t h e f i x e d a s s e t s w e re p h y s i c a l l y v e r i f i e d b y t h e m a n a g e m e n t d u r i n g t h e y e a r a n d n o m a t e r i a l d i s c r e p a n c i e s w e r e n o t i c e d o n s u c h v e r i f i c a t i o n a s c o m p a re d t o t h e a v a i l a b l e r e c o rd s . I n o u r o p i n i o n t h e f re q u e n c y o f s u c h v e r i f i c a t i o n i s re a s o n a b l e h a v i n g r e g a rd t o t h e s i z e o f t h e C o m p a n y a n d t h e n a t u re o f i t s a s s e t s . 2. N o n e o f t h e f i x e d a s s e t s h a v e b e e n re v a l u e d d u r i n g t h e y e a r. 3. As explained to us, the stock of stores, spare parts, r a w m a t e r i a l s a n d f i n i s h e d g o o d s h a v e b e e n p h y s i c a l l y v e r i f i e d b y t h e m a n a g e m e n t a t re a s o n a b l e i n t e r v a l s d u r i n g t h e y e a r. I n o u r o p i n i o n , t h e f re q u e n c y o f s u c h v e r i f i c a t i o n i s re a s o n a b l e h a v i n g r e g a r d t o t h e s i z e o f t h e C o m p a n y a n d t h e n a t u re o f i t s b u s i n e s s . 4. I n o u r o p i n i o n a n d a c c o rd i n g t o t h e i n f o r m a t i o n a n d e x p l a n a t i o n s g i v e n t o u s , t h e p ro c e d u re s o f p h y s i c a l v e r i f i c a t i o n o f s t o c k s f o l l o w e d b y t h e M a n a g e m e n t a s re a s o n a b l e a n d a d e q u a t e i n relation to the size of the Company and the nature o f i t s b u s i n e s s . 5. A s e x p l a i n e d t o u s t h e re w e r e n o m a t e r i a l d i s c re p a n c i e s n o t i c e d o n p h y s i c a l v e r i f i c a t i o n o f t h e s t o c k s o f r a w m a t e r i a l s , s t o re s a n d s p a re s and f i n i s h e d g o o d s h a v i n g re g a rd t o t h e s i z e o f t h e o p e r a t i o n s o f t h e Company and the same have been properly dealt with in t h e b o o k s o f a c c o u n t . 6. On the basis of our examination of stock and other re c o rd s a n d c o n s i d e r i n g t h e m e t h o d a d o p t e d f o r a c c o u n t i n g o f e x c i s e d u t y re f e r red t o i n N o t e N o . 7 o f S c h e d u l e (cid:145) N (cid:146) t o t h e a c c o u n t s , i n o u r o p i n i o n , the v a l u a t i o n o f s t o c k s i s f a i r a n d p ro p e r, i s i n accordance with the normally accepted accounting p r i n c i p l e s a n d i s o n t h e s a m e b a s i s a s i n t h e pre c e d i n g y e a r. 7. The Company has not taken any loans, secured or unsecured from companies. firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956, or from companies under the same management within the meaning o f s u c h s e c t i o n ( 1 B ) o f S e c t i o n 3 7 0 o f t h e Companies Act, 1956. 8. T h e C o m p a n y h a s n o t g r a n t e d a n y l o a n s s e c u red or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 a n d / o r t o t h e c o m p a n i e s u n d e r t h e s a m e management as defined under sub)section (1B) of S e c t i o n 3 7 0 o f t h e C o m p a n i e s 2 7 A N N E X U R E T O D I R E C T O R S R E P O R T Act, 1956, except interest free loans to its subsidiary 16. The Central Government has pr escribed maintenance c o m p a n i e s . A t t e n t i o n i s i n v i t e d t o N o t e N o . 9 o f o f C o s t R e c o r ds u n d e r S e c t i o n 2 0 9 ( 1 ) ( d ) o f t h e Schedule (cid:145)N(cid:146) to the accounts. In our opinion, having re g a r d t o t h e l o n g t e r m i n v o l v e m e n t w i t h t h e s u b s i d i a r y c o m p a n i e s a n d c o n s i d e r i n g t h e explanations given to us in this r egard the terms and c o n d i t i o n s o f t h e a b o v e a r e n o t , p r i m a f a c i e , pre j u d i c i a l t o t h e i n t e re s t s o f t h e C o m p a n y. 9. In re s p e c t o f t h e l o a n s a n d a d v a n c e s i n t h e n a t u r e C o m p a n i e s A c t , 1 9 5 6 i n r e s p e c t o f c e r t a i n m a n u f a c t u r i n g a c t i v i t i e s o f t h e C o m p a n y. We h a v e br oadly reviewed the accounts and r ecords of the C o m p a n y i n t h i s c o n n e c t i o n a n d ar e o f t h e o p i n i o n that prima facie, the pr escribed accounts and records h a v e b e e n m a d e a n d m a i n t a i n e d . W e h a v e n o t , h o w e v e r, m a d e a d e t a i l e d e x a m i n a t i o n o f t h e s a m e . of loans given by the Company to parties other than 17. Accor d i n g t o t h e re c o rd o f t h e C o m p a n y, P ro v i d e n t s u b s i d i a r y c o m p a n i e s m e n t i o n e d a b o v e , t h e y a r e F u n d s a n d E m p l o y e e s (cid:146) S t a t e I n s u r a n c e d u e s h a v e g e n e r a l l y r e p a y i n g t h e p r i n c i p a l a m o u n t s a s b e e n r e g u l a r l y d e p o s i t e d w i t h t h e a p p r o p r i a t e s t i p u l a t e d a n d a re a l s o re g u l a r i n t h e p a y m e n t o f authorities. i n t e re s t . 18. Accor d i n g t o i n f o r m a t i o n a n d e x p l a n a t i o n s g i v e n t o 10. In our opinion and according to the information and explanations given to us, there are adequate internal contro l procedur es commens ura te w ith the s ize o f t h e C o m p a n y a n d t h e n a t u re o f i t s b u s i n e s s f o r t h e p u rc h a s e o f S t o r e s , r a w m a t e r i a l s i n c l u d i n g c o m p o n e n t s , p l a n t a n d m a c h i n e ry, e q u i p m e n t a n d o t h e r a s s e t s a n d f o r t h e s a l e o f g o o d s . 11. In our opinion and according to the information and u s n o u n d i s p u t e d a m o u n t s p a y a b l e i n r e s p e c t o f Income tax, Wealth tax, Sales tax, Customs Duty and Excise Duty were outstanding as on 31st March, 1994 f o r a p e r i o d o f m o re t h a n s i x m o n t h s f r o m t h e d a t e o f b e c o m i n g p a y a b l e . 19. According to the information and explanations given t o u s a n d o n t h e b a s i s o f re c o rd s e x a m i n e d b y u s , no personal expenses of employees or Dir ectors have e x p l a n a t i o n s g i v e n t o u s . t h e re a re n o t r a n s a c t i o n s b e e n c h a r g e d t o R e v e n u e A c c o u n t o t h e r t h a n t h o s e o f p u rc h a s e o f g o o d s a n d m a t e r i a l s a n d s a l e o f p a y a b l e u n d e r c o n t r a c t u a l o b l i g a t i o n o r i n g o o d s , m a t e r i a l s a n d s e r v i c e s m a d e i n p u r s u a n c e of a c c o r d a n c e w i t h g e n e r a l l y a c c e p t e d b u s i n e s s c o n t r a c t s o r a r r a n g e m e n t s e n t e re d i n t h e r e g i s t e r practice. maintained under Section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000 ( R u p e e s F i f t y T h o u s a n d o n l y ) o r m o re i n re s p e c t o f 20. The Company is not a sick industrial company within the meaning of clause (o) of sub section (I) of Section 3 of the Sick Industrial Companies (Special Provisions) a n y p ar ty. 12. According to the information and explanations given t o u s , t h e C o m p a n y h a s a re g u l a r p r o c e d u re f o r t h e d e t e r m i n a t i o n o f u n s e r v i c e a b l e o r d a m a g e d s t o r e s , r a w m a t e r i a l s a n d f i n i s h e d g o o d s A d e q u a t e provision has been made in the accounts for the loss a r i s i n g o n t h e i t e m s s o d e t e r m i n e d . A c t , 1 9 8 5 . 21. I n respect of trading activities, we ar e informed that the Company do es not have da ma ge d g o ods Iy ing with it at the end of the year. Therefore, no provision f o r a n y l o s s i s r e q u i re d t o b e m a d e i n t h e a c c o u n t s . 13. In our opinion and according to the information and For CHATUR VEDI & SHAH For R A J E N D R A & C O . explanations given to us, the Company has complied with the provisions of Section 58A of the Companies Chartered Accountants Chartered Accountants A c t , 1 9 5 6 a n d t h e C o m p a n i e s ( A c c e p t a n c e o f D . C H AT U R V E D I R . J . S H A H Depos its ) Rules, 1975 with rega rd to the de pos its Partner Partner a c c e p t e d f ro m t h e P u b l i c . 14. I n o u r o p i n i o n r e a s o n a b l e r e c o r d s h a v e b e e n maintained by the Company for the sale and disposal o f r e a l i z a b l e b y - p r o d u c t s a n d s c r a p w h e re v e r For RAJAGOPALAN & CO. Chartered Accountants significant. Bombay D R . R . R A J A G O PALAN 15. In our opinion the internal audit system of the Company Dated: 1 1 t h J u l y, 1 9 9 4 Partner is c o m m e n s u r a t e w i t h i t s s i z e a n d t h e n a t u re o f i t s b u s i n e s s . 2 8 B A L A N C E S H E E T A S A T 3 1 S T M A R C H , 1 9 9 4 As at 31st March, 1994 Rs. Rs. (Rs. in crores) As at 31st March, 1993 Rs. Rs. Schedule SOURCES OF FUNDS Shareholders(cid:146) Funds Share Capital Reserves and Surplus Loan Funds Secured Loans Unsecured)Loans TOTAL APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in-Progress Investments Current Assets, Loans and Advances Current Assets Interest Accrued on investments Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets TOTAL Notes on Accounts (cid:145)A(cid:146) (cid:145)8(cid:146) (cid:145)C(cid:146) (cid:145)D(cid:146) (cid:145)E(cid:146) (cid:145)F(cid:146) (cid:145)G(cid:146) (cid:145)H(cid:146) (cid:145)I(cid:146) (cid:145)N(cid:146) 323.82 4,011.07 250.98 2,361.79 4,334.89 2,612.77 1,898.39 761.11 2,315.01 305.47 2,659.50 6,994.39 2,620.48 5,233.25 4,737.72 1,532.68 3,205.04 394.60 11.35 584.64 593.53 97.93 1,287.45 1,244.19 2,531.64 986.25 140.82 1,127.07 3,961.26 1,272.69 2,688.57 679.27 3,599.64 1,990.18 3,367.84 779.67 10.52 523.10 487.53 232.42 1,253.57 608.07 1,861.64 686.48 89.42 775.90 1,404.57 6,994.39 1,085.74 5,233.25 As per Report of even date For CHATURVEDI & SHAH Chartered Accountants For RAJENDRA & CO. Chartered Accountants For RAJAGOPALAN & Co. Chartered Accountants D Chaturvedi Partner R.J. Shah Partner Dr. R. Rajagopalan Partner Bombay Dated: 11th July, 1994 3 0 For and on behalf the Board D.H. Ambani M D Ambani Chairman & Managing Director Vice Chairman & Jt Managing Director Joint Managing Director Executive Director A.D. Ambani N.R. Meswani S.S. Betrabet B.D. Shah N.H. Ambani M.L. Bhakta T. Ramesh U. Pai Y.P. Trivedi V.M.Ambani } } Nominee Directors Directors Secretary P R O F I T & L 0 S S A C C O U N T F O R T H E Y E A R E N D E D 3 1 S T M A R C H , 1 9 9 4 Schedule Rs. Rs. Rs. Rs. 1993-94 1992-93 (Rs. in crores) I N C O M E S a l e s a n d i n t e r ) d i v i s i o n a l Tr a n s f e r s Sales I n t e r-d i v i s i o n a l Tr a n s f e r s ( a s p e r C o n t r a ) 5,345.18 4,105.50 4,177.98 1,167.20 3,107.88 997.62 Oth er Income V a r i a t i o n i n S t o c k EX PE NDITURE Purchases I n t e r ) d i v i s i o n a l Tr a n s f e r s ( a s p e r C o n t r a ) M a n u f a c t u r i n g a n d O t h e r E x p e n s e s Interest D e p r e c i a t i o n (cid:145) J (cid:146) (cid:145) K (cid:146) (cid:145)L(cid:146) (cid:145)M(cid:146) 1 1 6 . 0 0 8 . 4 9 5 , 4 6 9 . 6 7 6 8 . 4 6 3 4 . 1 2 4 , 2 0 8 . 0 8 53.65 1,167.20 3 , 1 8 9 . 0 8 2 3 3 . 5 8 2 5 5 . 1 9 4,898.70 33.96 997.62 2 , 3 3 3 . 8 3 2 7 9 . 3 5 2 7 9 . 8 1 3,924.57 L e s s : P re o p e r a t i v e e x p e n s e s o f p ro j e c t s u n d e r c o m m i s s i o n i n g 4.52 38.24 P ro f i t f o r t h e y e a r Add: Bala nce brought for ward f rom las t yea r A d d : I n v e s t m e n t A l l o w a n c e ( U t i l i s e d ) R e s e r v e w r i t t e n b a c k 54.40 27.75 A m o u n t Av a i l a b l e F o r A p p ro p r i a t i o n s A P P R O P R I AT I O N S Cap ital Redemption R es erve I n v e s t m e n t A l l o w a n c e R e s e r v e Debent ure Redemption R es er ve G e n e r a l R e s e r v e Pro p o s e d D i v i d e n d ( s u b j e c t t o t a x ) : Preference Shares Equity Shares ---- 6.70 30.50 419.02 0.83 138.35 B a l a n c e c a r r i e d t o B a l a n c e S h e e t N o t e s o n A c c o u n t s (cid:145) N (cid:146) 4,894.18 5 7 5 . 4 9 82.15 6 5 7 . 6 4 3,886.33 321.75 36.12 357.87 20.02 16.10 0.30 92.00 25.50 100.00 0.86 84.81 595.40 6 2 . 2 4 303.47 5 4 4 0 As per Report of even date For CHATURVEDI & SHAH Chartered Accountants For RAJENDRA & CO. Chartered Accountants For RAJAGOPALAN & Co. Chartered Accountants D Chaturvedi Partner R.J. Shah Partner Dr. R. Rajagopalan Partner Bombay Dated: 11th July, 1994 A.D. Ambani N.R. Meswani S.S. Betrabet B.D. Shah N.H. Ambani M.L. Bhakta T. Ramesh U. Pai Y.P. Trivedi V.M.Ambani } } For and on behalf the Board D.H. Ambani M D Ambani Chairman & Managing Director Vice Chairman & Jt Managing Director Joint Managing Director Executive Director Nominee Directors Directors Secretary 3 1