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Reliance Industries Ltd.

BSE: 500325 Sector: Oil & Gas
NSE: RELIANCE ISIN Code: INE002A01018
BSE 00:00 | 24 Apr Reliance Industries Ltd
NSE 05:30 | 01 Jan Reliance Industries Ltd
OPEN 1354.90
PREVIOUS CLOSE 1371.50
VOLUME 2452068
52-Week high 1617.80
52-Week low 875.70
P/E 24.36
Mkt Cap.(Rs cr) 898,505
Buy Price 1420.05
Buy Qty 90.00
Sell Price 1426.00
Sell Qty 100.00
OPEN 1354.90
CLOSE 1371.50
VOLUME 2452068
52-Week high 1617.80
52-Week low 875.70
P/E 24.36
Mkt Cap.(Rs cr) 898,505
Buy Price 1420.05
Buy Qty 90.00
Sell Price 1426.00
Sell Qty 100.00

Reliance Industries Ltd. (RELIANCE) - Auditors Report


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Company auditors report

TO

THE MEMBERS OF

RELIANCE INDUSTRIES LIMITED

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

OPINION

We have audited the accompanying Standalone Financial Statements of Reliance IndustriesLimited ("the Company") which comprise the Balance sheet as at March 31 2019the Statement of Profit and Loss including the statement of Other Comprehensive Incomethe Cash Flow Statement and the Statement of Changes in Equity for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Companies Act2013 as amended (‘the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2019 its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

BASIS FOR OPINION

We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the र Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the र Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Financial Statements.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements for the financial yearended March 31 2019. These matters were addressed in the context of our audit of theStandalone Financial Statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the Standalone Financial Statements section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Standalone Financial Statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Standalone Financial Statements.

Key audit matters How our audit addressed the key audit matter
A. Carrying value of Investments in Reliance Energy Generation and Distribution Limited
Management regularly reviews whether there are any indicators of impairment on the investments made by the Company (Refer Note B.2 (p).i.E by reference to the requirements under Ind AS 36 "Impairment of Assets"). Our audit procedures included and were not limited to the following:
Accordingly management has identified impairment indicators (operating losses negative net-worth) in Reliance Energy Generation and Distribution Limited (REGDL) a wholly owned subsidiary of the Company with an investment of र 10501 crore. • Obtained and read the financial statements of REGDL and its subsidiaries to identify any disclosure for impairment of assets in their standalone financial statements.
As a result an impairment assessment has been performed by the Company by comparing the carrying value of these investments to their recoverable amount to determine whether an impairment was required to be recognised. • Assessing the appropriateness of the Company's valuation methodology applied in determining the recoverable amount. In making this assessment we also evaluated the objectivity independence and competency of specialists involved in the process.
For the purpose of the above impairment testing value in use has been determined by forecasting and discounting future cash flows. • Assessing the assumptions around the key drivers of the cash flow forecasts including future oil and natural gas prices and reserves volumes discount rates etc.
Furthermore the value in use is highly sensitive to changes in some of the inputs used for forecasting the future cash flows e.g. future oil and natural gas prices and reserves volumes. • Assessing the appropriateness of the weighted average cost of capital used in the determining recoverable amount by engaging valuation experts.
The determination of the recoverable amount of the investments in REGDL involved judgment due to inherent uncertainty in the assumptions supporting the recoverable amount of these investments. • Discussing/Evaluating potential changes in key drivers as compared to previous year/actual performance with management in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable.
Accordingly the evaluation of impairment of investments in REGDL was determined to be a key audit matter.
• Assessing the recoverable value headroom by performing sensitivity analysis of key assumptions used.
• Performed inquiry procedures with the auditor of the step down subsidiary of REGDL on their significant findings in relation to the key data and assumptions used by the management for estimating the oil and gas reserve; calculation of the depletion charge and future net income and reasonableness of the discount rate used by the subsidiary for calculating the future net income for impairment calculation.
B. Investment in Reliance Jio Infocomm Limited (RJIL)
A) As at March 31 2019 the Company has a total investments of र 44200 crore in Reliance Jio Infocomm Limited (subsidiary of the Company) which constitutes 13 % of the total investment portfolio of the Company (Refer Note 2 of the financial statements). These investments are classified as financial assets in the financial statements. A) In respect of the impairment indicator assessment for the investments in RJIL our audit procedures included and were not limited to the following:-
• Obtained and read the financial statements of RJIL to identify if any disclosure is made for impairment of assets in its standalone financial statements.
As per Ind AS 36-'Impairment of assets' the standard is applicable to financial assets classified as subsidiaries.
Accordingly in assessing whether there is any indication that an asset may be impaired an entity shall consider as a minimum the external and internal sources of information any other indications or evidences from internal reporting that indicates that the assets may be impaired. • Obtained the impairment indicator assessment performed by the management considering internal/external sources of information specifically relating to RJIL tangible and intangible assets including ‘Spectrum/License fee' and related expected pattern of consumption of expected future benefits.
In case of RJIL the existence of an impairment indicator is significantly influenced by whether there is an impairment to the underlying property plant and equipment and intangible assets including ‘Spectrum/License fee' in its financial statements. • Performed inquiry procedures with the subsidiary auditor on their significant findings in relation to amortization and impairment of property plant and equipment and intangible assets especially in relation to र Spectrum/License fee'.'
This assessment involves significant judgment especially in relation to determination of the expected pattern of consumption of the expected future economic benefits.
B) Further in the current year as part of Composite Scheme of Arrangement between RJIL Jio Digital Fibre Private Limited (JDFPL) and Reliance Jio Infratel Private Limited (RJIPL) (‘the scheme') for demerger of optic fiber cable undertaking of RJIL upon the scheme becoming effective on 31 March 2019 the Company being shareholder of RJIL has received Equity Shares and Optionally Convertible Preference Shares with surplus rights (‘OCPS') of JDFPL. Pursuant to receipt of these Equity Shares and OCPS the Company has allocated its cost of investments in RJIL into RJIL and JDFPL and elected to value its investment in OCPS at Fair value through Other Comprehensive Income (FVOCI). B) In respect of the accounting treatment applied in the financial statements pursuant to demerger of optic fiber cable undertaking of RJIL our audit procedures included and were not limited to the following:-
• Obtained and read the composite scheme of arrangement for demerger of the optic fiber cable undertaking.
• Obtained the memo prepared by the Company in consultation with external experts (including related assumptions and accounting policy choice) on the accounting treatment to be applied in the financial statements.
Subsequently Company sold its controlling equity stake in JDFPL to Digital FIbre Infrastructure Trust resulting into a gain of र 494 crore recognised in the statement of profit & loss. The remaining Equity investment in JDFPL has been measured at FVTPL and OCPS continued to be measured at FVTOCI. The Company has no control or significant influence over JDFPL post the sale of controlling stake. Refer Note 2.3 of the financial statements.
• Evaluating whether the measurement recognition and disclosure of the said transaction is in line with the applicable Indian Accounting Standards.
• Performing substantive testing procedures including involvement of valuation specialists for testing of the valuation reports provided by the management for appropriateness of assumptions involved and testing of the computation.
The same has been reported as a significant transaction that occurred during the current year which involves exercise of judgment and interpretation of the relevant Indian Accounting Standards and applicable statutes/regulations. Accordingly assessment of impairment indicator for the investments in RJIL and accounting treatment in the financial statements pursuant to demerger of optic fiber cable undertaking of RJIL has been considered as a key audit matter.
• Assessing whether the accounting entries recorded in the books is in line with the accounting treatment assessed above including the arithmetical accuracy of the same.
• Performed inquiry procedures with the auditors of RJIL on the accounting treatment applied in its standalone financial statements in respect of the demerger.
• Review of the disclosure made by the Company in the financial statements in this regard.
C. Capitalisation of property plant and equipment
As part of Gasification project the Company has incurred additional capital expenditure for modification of power plant equipments i.e. Gas Turbines Auxiliary Boilers HRSGs Process Furnaces etc. to make them compatible to multiple feedstock including those received from petcoke gasifier. Currently all units of the gasification complex its associated utilities and offsites have been started and the complex is under stabilization. Our audit procedures included and were not limited to the following
• Assessing the nature of the costs incurred to substantially modify the existing power plants to test whether such costs are incurred specifically for trial run and meet the recognition criteria as set out in para 16 to 22 of Ind AS 16.
• Evaluating the assessment provided by third party vendors involved in the construction and testing process to determine whether capitalisation ceased when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by the management.
The testing phase of the project is under progress as at March 31 2019 as it has not achieved the quality and efficiency parameters. Accordingly significant level of judgement is involved to ensure that capitalisation of Property Plant and Equipment meet the recognition criterias of Ind AS 16-Property Plant and Equipment specifically in relation to determination of trial run period and costs associated with trial runs for it to be ready for intended use.
As a result the aforesaid matter was determined to be a key audit matter.
D. Changes in useful life and residual value of plant and machinery
As at March 31 2019 the Company had a gross block of र 228340 crore in plant and machinery which constitutes 72.32% of the property plant and equipment (Refer Note 1 of the financial statements). Our audit procedures included and were not limited to the following:
• Evaluating the reasonableness of the assumptions considered by the management in estimation of useful life and residual values.
In the current year the Company has revised the useful life and residual value of the plant and machinery. Assessment of useful life and residual values of plant and machinery in an integrated and complex plants involves management judgment consideration of historical experiences anticipated technological changes etc. Refer Note 1.7 of the financial statements. Accordingly it has been determined as a key audit matter. • Examining the useful economic lives and residual value assigned with reference to the Company's historical experience technical evaluation by third party and our understanding of the future utilisation of assets by the Company.
• Assessing whether the impact on account of the change has been appropriately recognised in the financial statements.
• Review of the disclosure made by the Company in the financial statements in this regard.
E. Estimation of oil reserves and decommissioning liabilities
Refer to Note 32.2 on proved reserves and production both on product and geographical basis and Note C(A) on estimation of Oil and Gas reserves Note C(C) on depreciation and amortisation and Note 16 of the financial statements. Our procedures have focused on management's estimation process in the determination of oil and gas reserves and decommissioning liabilities. Our work included and were not limited to the following procedures:
The determination of the Company's oil and natural gas reserves requires significant judgments and estimates to be applied. • Understand the Company's process associated with the oil and gas reserves estimation process.
Factors such as the availability of geological and engineering data reservoir performance data acquisition and divestment activity drilling of new wells and commodity prices all impacts the determination of the Company's estimates of oil and natural gas reserves. • Evaluating the objectivity independence and competence of the Internal specialists involved in the oil and gas reserves estimation process.
The Company bases its proved reserves estimates considering reasonable certainty with rigorous technical and commercial assessments based on conventional industry practice and regulatory requirements. • Assessing whether the updated oil and gas reserve estimates were included appropriately in the Company's consideration of impairment accounting for amortization/depletion and disclosures of proved reserves and proved developed reserves in the financial statements.
Estimates of oil and gas reserves are used to calculate depletion charges for the Company's oil and gas assets.
The impact of changes in estimated proved reserves is dealt with prospectively by amortising the remaining carrying value of the asset over the expected future production. Oil and natural gas reserves also have a direct impact on the assessment of the recoverability of asset's carrying values reported in the financial statements. • Testing of assumption used in the determining the decommissioning provisions. Also compared these assumptions with past year and enquired for reasons for any variations.
Further the recognition and measurement of decommissioning provisions involves use of estimates and assumptions relating to timing of abandonment of well and related facilities which would depend upon the ultimate life of the field expected utilization of assets by other fields the scope of abandonment activityand pre-tax rate applied for discounting. Accordingly the same is considered as a key audit matter.
F. Litigation matters (Oil and Gas)
The Company has certain significant open legal proceedings under arbitration for various complex matters with the Government of India and other parties continuing from earlier years which are as under: Our audit procedures included and were not limited to the following:
• Assessing management's position through discussions with the in-house legal expert and external legal opinions obtained by the Company (where considered necessary) on both the probability of success in the aforesaid cases and the magnitude of any potential loss.
a) Disallowance of certain costs under the production sharing contract relating to Block KG-DWN-98/3 and consequent deposit of differential revenue on gas sales from D1D3 field to the gas pool account maintained by Gail (India) Limited (Refer Note 32.3 and Note 32.4 (b)). b) Claim against the Company in respect of gas said to have migrated
• Discussion with the management on the development in these litigations during the year ended March 31 2019.
c) Claims relating to limits of cost recovery profit sharing and audit and accounting provisions of the public sector corporations etc. arising under two production sharing contracts entered into in 1994 (Note 32.4(c) ). from neighboring blocks (KGD6) (Note 32.4 (a)).
• Roll out of enquiry letters to the Company's legal counsel (internal/ external) and study the responses received from them. Also verified that accounting/disclosure made by the Company are in accordance with the assessment of legal counsel.
d) Suit for specific performance of a contract for supply of natural gas before the Hon'ble Bombay High Court (Note 32.4 (d)). • Review of the disclosures made by the Company in the financial statements in this regard.
Due to complexity involved in these litigation matters management's judgement regarding recognition and measurement of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined. Accordingly it has been considered as a key audit matter. • Obtained representation letter from the management on the assessment of these matters.
G. IT systems and controls over financial reporting
We identified IT systems and controls over financial reporting as a key audit matter for the Company because its financial accounting and reporting systems are fundamentally reliant on IT systems and IT controls to process significant transaction volumes specifically with respect to revenue and raw material consumption. Our procedures included and were not limited to the following:
• Assessing the complexity of the IT environment by engaging IT specialists and through discussion with the head of IT.
Automated accounting procedures and IT environment controls which include IT governance IT general controls over program development and changes access to programs and data and IT operations IT application controls and interfaces between IT applications are required to be designed and to operate effectively to ensure accurate financial reporting. • Assessing the design and evaluation of the operating effectiveness of IT general controls over program development and changes access to programs and data and IT operations by engaging IT specialists.
• Assessing the design and evaluation of the operating effectiveness of IT application controls in the key processes impacting financial reporting of the Company by engaging IT specialists.
• Assessing the operating effectiveness of controls relating to data transmission through the different IT systems to the financial reporting systems by engaging IT specialists.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe Standalone Financial Statements and our auditors' report thereon.

Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether such other informationis materially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF MANAGEMENT FOR THE STANDALONE FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the Standalone Financial Statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the StandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsfor the financial year ended March 31 2019 and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

OTHER MATTER

The accompanying standalone financial statements and other financial informationincludes the Company's proportionate share in unincorporated joint operation in respect oftotal assets of र 55 crore total expenditure of र 494 crore and the elements makingup the cash flow statement and related disclosures in respect of an unincorporated jointoperation which is based on statements from the operator and certified by the management.Our opinion is not modified in respect of above matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure 1" a statement on the matters specified inparagraphs 3 and 4 of the Order;

2. As required by Section 143(3) of the Act we report that:

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

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct;

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these Standalone Financial Statements and theoperating effectiveness of such controls refer to our separate Report in "Annexure2" to this report;

(g) In our opinion the managerial remuneration for the year ended March 31 2019 hasbeen paid/provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Financial Statements-Refer Note 33 to the Standalone FinancialStatements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company except for an amount of र 1.51crore which are held in abeyance due to pending legal cases.

For D T S & Associates For S R B C & CO LLP
Chartered Accountants Chartered Accountants
(Registration No.142412W) (Registration No.324982E/E300003)
T P Ostwal Vikas Kumar Pansari
Partner Partner
Membership No. 030848 Membership No. 093649
Mumbai
Date: April 18 2019

Annexure 1

To the Independent Auditor's Report of even date on the Standalone Financial Statementsof Reliance Industries Limited

(Referred to in paragraph 1 under र Report on Other Legal and RegulatoryRequirements' section of our Report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme for physical verification in a phased periodicmanner which in our opinion is reasonable having regards to the size of the Company andthe nature of its assets. No material discrepancies were noticed on such verification.

(c) According to information and explanations given by the management the titledeeds/lease deeds of immovable properties included in property plant and equipment areheld in the name of the Company except for the immovable properties which were acquired byentities that have since been amalgamated with the Company property acquired during theprevious year of र 178 crore for which the registration of title deeds is in progressand in cases of leasehold land of र 89 crore in respect of which the allotment lettersare received and supplementary agreements entered; however lease deeds are pendingexecution. (Refer note 1.1 of the Financial Statements).

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.

(iii) (a) The Company has granted loans to parties covered in the register maintainedunder section 189 of the Companies Act 2013. In our opinion and according to theinformation and explanations provided to us the terms and conditions of the grant of suchloans are prima facie not prejudicial to the Company's interest.

(b) The schedule of repayment of principal and payment of interest has been stipulatedfor the loans granted and the repayment/receipts are regular.

(c) The Principal and interest are not overdue in respect of loans granted tocompanies firms or other parties listed in the register maintained under section 189 ofthe Companies Act 2013 which are overdue for more than ninety days.

(iv) In our opinion and according to the information and explanations provided to usthe Company has not granted any loans or provided any guarantees or security to theparties covered under Section 185 of the Act. The Company has complied with the provisionsof Section 186 of the Act in respect of investments made or loans or guarantee or securityprovided to the parties covered under Section 186.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to the manufacturing activities andare of the opinion that prima facie the specified accounts and records have been made andmaintained. We have not however made a detailed examination of the same.

(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident fund Employees' State InsuranceIncome-tax Sales-tax Goods and Services tax Service tax Duty of Custom Duty ofExcise Value Added Tax Cess and Other Statutory Dues applicable to it.

(b) According to the information and explanations provided to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax Sales TaxGoods and Service tax Service tax Duty of custom Duty of excise Value added tax Cessand Other Statutory Dues were outstanding at the year end for a period of more than sixmonths from the date they became payable.

(c) According to the records of the Company the dues of Income-tax Sales-tax Servicetax Duty of Custom Duty of Excise Value added tax and Cess which have not beendeposited on March 31 2019 on account of any dispute are as follows:

Name of the Statute Nature of Dues Amount (र in crore) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 28 Various Years from 1997-98 to 2016-17 Commissioner of Income-Tax (Appeals)
Central Excise Act 1944 Excise Duty and Service Tax -* Various Years from 1990-91 to 2017-18 Commissioner of Central Excise (Appeals)
210 Various Years from 1991-92 to 2016-17 Central Excise and Service Tax Appellate Tribunal
4 Various Years from 2006-07 to 2009-10 High Court
Central Sales Tax Act 1956 and Sales Tax Act of various States Sales Tax/ VAT and Entry Tax 496 Various Years from 1983-88 to 2011-12 Sales Tax Appellate Tribunal
55 Various Years from 2000-01 to 2011-12 High Court
23 2001-02 and 2005-06 Supreme Court
Customs Act 1962 Customs Duty 20 2007-08 Central Excise and Service Tax Appellate Tribunal

* र 0.12 crore

(viii) In our opinion and according to the information and explanations provided by themanagement the Company has not defaulted in repayment of loans or borrowing to afinancial institution bank or government or dues to debenture holders.

(ix) In our opinion and according to the information and explanations provided by themanagement the Company has utilized the monies raised by way of debt instruments and termloans for the purposes for which they were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the Financial Statements and according to the information and explanationsprovided by the management we report that no fraud by the Company or no material fraud onthe Company by the officers and employees of the Company has been noticed or reportedduring the year.

(xi) According to the information and explanations provided by the management themanagerial remuneration has been paid/provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a nidhi company.

Therefore the provisions of clause 3(xii) of the Order are not applicable to theCompany and hence not commented upon.

(xiii) According to the information and explanations provided by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the financialstatements as required by the applicable accounting standards.

(xiv) According to the information and explanations provided to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) of the Order are notapplicable to the Company and not commented upon.

(xv) According to the information and explanations provided by the management theCompany has not entered into any non-cash transactions with directors or persons connectedwith him as referred to in section 192 of Companies Act 2013.

(xvi) According to the information and explanations provided to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For D T S & Associates For S R B C & CO LLP
Chartered Accountants Chartered Accountants
(Registration No.142412W) (Registration No.324982E/E300003)
T P Ostwal Vikas Kumar Pansari
Partner Partner
Membership No. 030848 Membership No. 093649
Mumbai
Date: April 18 2019

Annexure 2

To the Independent Auditor's Report of even Date on the Standalone Financial Statementsof Reliance Industries Limited

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (i) OF SUB-SECTION 3 OF SECTION143 OF THE COMPANIES ACT 2013 ("THE ACT")

We have audited the internal financial controls over financial reporting of RelianceIndustries Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the Standalone Financial Statements of the Company for the year ended on thatdate.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these standalone financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note on Auditof Internal Financial Controls Over Financial Reporting (the "Guidance Note")and the Standards on Auditing as specified under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls and both issuedby the Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to these standalone financial statements was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting with reference to these standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of internalfinancial controls over financial reporting with reference to these standalone financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting with reference to these standalone financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESEFINANCIAL STATEMENTS

A company's internal financial control over financial reporting with reference to thesestandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control over financial reporting with referenceto these standalone financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITHREFERENCE TO THESE STANDALONE FINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these standalone financial statementsand such internal financial controls system over financial reporting with reference tothese standalone financial statements were operating effectively as at March 31 2019based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For D T S & Associates For S R B C & CO LLP
Chartered Accountants Chartered Accountants
(Registration No.142412W) (Registration No.324982E/E300003)
T P Ostwal Vikas Kumar Pansari
Partner Partner
Membership No. 030848 Membership No. 093649
Mumbai
Date: April 18 2019