IRJMST Vol 9 Issue 4 [Year 2018] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

An Analytical Report on Cash Flow Analysis of Reliance Industries

*K. Pavithra

Research Scholar (Ph.D)

Hindusthan College of Arts and Science

**Dr. M. Nirmala
Professor & Head,
Department of Commerce (PA&AF)
Hindusthan college of Arts and Science (Autonomous) Coimbatore - 28.

Abstract:

In this analysis take the Reliance Industry to find out the cash flow statement of the Last two years
205-2016 and 2016-2017. In the Cash flow statement analyze the Cash flow operation activities,
Cash from Investment activities and Cash from the financial activities. Data‘s taken from the
Secondary data of the Industry. To analyze the Profit and the opening and closing cash balance of the
company.
Key Words: Cash Flows, Profit, Opening and Closing Cash Balance.

Introduction:
Cash Flow states to the statement in financial accounting as to required report under generally
accepted accounting principles. The cash flow statement shows the inflows and outflows of actual
cash from operating, investing or financing activities. In Cash Flows shows the Cash flow operations
of the company, Cash flow Investment of the Company and the Cash Flow of the financial activities
of the company. To the Profitability and the cash Inflows of the company and Outflows of the
Company. The Cash flow statement shows the overall cash flows in the Organization and the
measurement of the Incomes of the Organization.
Companies receive inflows of cash revenue from selling goods, providing services, selling assets,
earning interest on investments, rent, and taking out loans or issuing new shares. Cash outflows can
result from making purchases, paying back loans, expanding operations, paying salaries or
distributing dividends.

Reliance Industries:

Reliance Industry Limited (RIL) headquartered in Mumbai, Maharashtra, India. Reliance business
across India engaged in Textiles, Natural Resources, Retail, Energy and Telecommunications. In
India Reliance is the most profitable company in India. The Largest market capitalization publicly
traded company in India and the second largest company in India is Indian Oil Corporation.

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IRJMST Vol 9 Issue 4 [Year 2018] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

Credit Ratings: It has received domestic credit ratings of AAA from CRISIL (S&P subsidiary) and
Fitch. Moody's and S&P have provided investment grade ratings for international debt of the
Company, as Baa2 positive outlook (local currency issuer rating) and BBB+ outlook respectively.
On the 28th of December, 2017, RIL announced that it will be acquiring the wireless assets of Anil
Ambani-led Reliance Communications for about 23,000 crores.

Major subsidiaries and associates

The company had 123 subsidiary companies and 10 associate companies.

 Reliance Retail
 Reliance Life Sciences
 Reliance Institute of Life Sciences (RILS),
 Reliance Logistics
 Reliance Clinical Research Services (RCRS),
 Reliance Solar
 Relicord
 Reliance Jio Infocomm Limited (RJIL)
 Reliance Industrial Infrastructure Limited ]
 LYF, a 4G-enabled VOLTE device brand from Reliance Retail Network 18, a mass media
company.
Review of the Literature:

1. Bogumila Bryez & Marek Pauka in their study analyzes the financial position of the company
and also explains the cash flow activities like operational activities, investing activities and financial
activities. Also analyze the cash flow statement of the company. Finally the authors identified the
traditional cash flow analysis is limited to the vertical analysis of net cash flow from the three levels
of activities and more rarely the ratio analysis based on the these three net cash flows.

2. Aghdas Jafari Motlagh in his study about the cash flow statement entity and the preparation of
the cash flow statement by using cash receipt and cash payment from major sectors. Author used
data‘s to analyze the cash flow statement and also find the various financial statements to find the
financial position and performance of the company.

3. Rohit Kumar Sharma & Ashit Saha in their research to study the impact of cash flow reporting
on the individual shareholders investment decision and also use the business activities to measure the
financial activities, operational activities and investment activities. The study reveals that the
investors are not confident about the impact of the cash flow reported on their investment decision
making process.

4. Mangayarkkarasi Muthuvelan in her study used two statements like cash from operations and
cash flow statement and analyze the financial position of the company by using various data‘s. last

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IRJMST Vol 9 Issue 4 [Year 2018] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

five years data are using in this company and using the cash flow statement formula to analyze the
data‘s and find out the best financial year of that company.

5. Rajeeva Sinha & Vijay Jog their study analyze the mutual and investors on a specific focus on
the fund. The authors analyze the various performances of the fund flows and individuals. They find
that there is mutual fund does not outperform.

Objective of the Study:

1. To understand the concept of Cash flow statement of the Reliance Industry.

2. To study the profitability of the Reliance Industry.

Research Methodology:
Secondary Data used in this analysis of the cash flow statement.
Table showing the Cash Flow Statement of the Reliance Industry

Cash Flow Statement (Rs.In Crore)

2016-2017 2015-2016
A.Cash Flow From Operating Activities 40,777 36,016
Adjusted For
(Profit)/Loss on Sale/discard of Assets(Net) (504) 20
Depreciation/Amortisation and Depletion Expense 8465 8590
Effect of Exchange Rate Change (2062) (2911)
Net Gain on Investments (4116) (2788)
Dividend Income (271) (691)
Interest Income (3535) (4169)
Finance Cost 2723 2562
Operating Profit Before Working Capital Changes 41477 36629
Adjusted For
Trade and Other Receivables (1857) 220
Inventories (5984) 8517
Trade and Other Payables 27,374 6210
Cash Generated from Operations 61,010 51,576
Taxes Paid (Net) (9,560) (8,129)

Net Cash flow from Operating Activities 51,450 43,447

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of tangible and intangible assets (30,266) (20,216)
Proceeds from disposal of tangible and intangible assets 1,452 293
Investments in Subsidiaries / Trusts (66,498) (25,255)

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IRJMST Vol 9 Issue 4 [Year 2018] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

Disposal of investments in Subsidiaries 26,461 444

Purchase of Other Investments (6,09,377) (6,68,990)

Proceeds from sale of financial assets 6,19,551 6,68,877
Net cash flow for other financial assets 1,304 (917)
Interest Income 2,153 3,850
Dividend Income from Subsidiary and Associates 10 47
Dividend Income from Others 261 644
Net Cash flow (Used in) Investing Activities (54,949) (41,223)

C: CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Issue of Equity Share Capital 692 283
Share Application Money assets 4 8
Proceeds from Long Term Borrowings 10,065 7,189
Repayment of Long Term Borrowings (15,329) (4,591)
Short Term Borrowings (Net) 8,284 1,843
Dividends Paid (including Dividend Distribution Tax) - (7,259)
Interest Paid (5,355) (4,376)
Net Cash flow from/(Used in) Financing Activities (1,639) (6,903)
Net (Decrease) in Cash and Cash Equivalents (5,138) (4,679)
Opening Balance of Cash and Cash Equivalents 6,892 11,571
Closing Balance of Cash and Cash Equivalents* 1,754 6,892

Include towards Unclaimed Dividend of ` 241 crore (Previous Year ` 223 crore)
Other Receivables from Subsidiary aggregating to ` Nil (Previous Year ` 3,263) have been converted
into investments in Zero Coupon Unsecured Optionally Fully Convertible Debentures.

Table Showing the Reliance Industries Cash flow statement of 2015-2016 and 2016-2017,
Comparing to the Cash flow from operating activities 2015-2016 and 2016-2017 in 2017 is higher
Rs.40,777 Crore. Profit reduced in the year 2017. The Industry reduces the depreciation amount
comparing to the previous year and exchange rate also decreased. Net gain Increased comparing to
the previous year 2016. In Share, the dividend Income reduced 2017. Interest also reduced, Finance
cost increased, Finally the operation cost Increased comparing to the last year 2016.Trade Increased,
Inventories decreased, cash increased, Tax payment Increased and finally Net cash flow Increased in
2017.

In Cash Flow from Investing Activities the purchased increased, tangible and Intangible increased.
Investment also increased, net cash flow increased, Interest also increased but the dividend amount
decreased, Net cash flow in Investing Activities is increased in the year 2017.

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IRJMST Vol 9 Issue 4 [Year 2018] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

Cash Flow from Financing Activities the equity capital high in the year 2017, share reduced, Long
term Borrowing increased, repayment of long term also increased, Short term borrowing increased,
Net cash flow from Financing Activities reduced in the year 2017. Finally comparing to the opening
and closing cash balance, the closing balance in the year 2016-2017 is reduced.

Conclusion:

The Reliance Industry has to concentrate on the raise in the dividend of the shares and has to
implement the incomes of the Industry. The Industry has to Increase the profit of Upcoming years.
Overall performance of the Industry the cash flows are increasing in the Investment activities only
but there is raise in the Incomes of the Industry, the Industry has to raise the cash from the Incomes
from the Investment.

References:

1. Bogumila Bryez & Marek Pauka Financial Sciences / Nauki o Finansach . 2012, Vol. 1 Issue
10, p131
2. Aghdas Jafari Motlagh IOSR Journal of Business and Management (IOSR JBM) ISSN: 2278
487X. Volume, Issue (Jan. Feb. 2013), PP 09 16.
3. Rohit Kumar Sharma & Ashit Saha,SMS Varanasi, Vol. XI, No. 2; December 2015.
4. Mangayarkkarasi Muthuvelan, IJMRR/May 2015/ Volume 5/Issue 5/Article No-4/315-320
Mangayarkkarasi Muthuvelan / International Journal of Management Research & Review.

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