Reliance Industries Limited (RIL) is a fortune 500 company, and is the largest private sector company in India. It is the flagship company of Reliance Group founded by Mr. Dhirubhai Ambani. The company reported consolidated net profit after tax of ₹ 24,423 crore for the year 2009–10 compared to ₹ 14,950 crore during 2008–09. The excerpts from the consolidated profit and loss account of the company for the year ended 31st March 2010 and the previous year are given as follows:

Consolidated Profit and Loss Account for the Year Ended

Questions for Discussion

1. The PAT of the company has grown from ₹ 14,950 crore in 2008–09 to ₹ 24,423 crore in 2009–10. How do you rate the performance of the company?

2. What are the main contributors for increase in the profit of the company?

3. The schedule of ‘Other Income’ of RIL discloses an exceptional item amounting to ₹ 8,605.57 crore as ‘income from sale of Reliance Industries Limited shares by Petroleum Trust’. No other details regarding this gain have been provided in the annual report. Is it correct to include exceptional item in the Other Income category?

4. How should RIL have disclosed the exceptional items?

5. How do you rate the performance of the company excluding exceptional item?

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Particulars Net sales/income from operations Other income Change in stock Total income Purchases Operating and other expenses Depreciation and amortization Interest and finance charges Profit before tax Provision for tax • Current • Fringe benefits tax • Deferred Net profit after tax Basic and diluted EPS () Basic and diluted EPS )(before exceptional items) 2010 (* in Crore) 203,740 10,791 6,035 220,566 7,538 171,343 10,946 2,060 28,679 3,125 - 1,131 24,423 82.29 53.39 2009 (* in Crore) 151,224 1,914 2,270 155,408 7,202 122,870 5,651 1,816 17,869 1,208 65 1,646 14,950 54.11 55.30