Introduction

Reliance Capital Limited is a part of the Reliance ADA

group, one of India’s largest business houses. The
group comprises companies in the telecommunications,
financial services, media and entertainment,
infrastructure and energy sectors. The energy sector
companies include Reliance Infrastructure Ltd, Reliance
Natural Resources Limited, Reliance Energy
Transmission, Reliance Energy Trading and Reliance
Capital Limited.
Reliance Capital Limited is part of the Reliance Anil
Dhirubhai Ambani Group and is established to develop,
construct and operate Capital projects domestically and
internationally. The Company on its own and through
subsidiaries has a portfolio of almost 35,000 MW of
Capital generation capacity, both operational as well as
under development.
The Capital projects are planned to be diverse in
geographic location, fuel type, fuel source and off-take,
and each project is planned to be strategically located
near an available fuel supply or load center. The
company has over 1,000 MW of operational power
generation assets. The projects under development
include seven coal-fired projects to be fueled by
reserves from captive mines and supplies from India
and abroad, two gas-fired projects to be fueled
primarily by reserves from the Krishna Godavari Basin
(the "KG Basin") off the east coast of India, and seven
hydroelectric projects, six of them in Arunachal Pradesh
and one in Uttarakhand. The fuel supply for the
majority of the projects has been tied up. Coal linkages
have been allocated for domestic coal based projects.
The company has domestic coal reserves of over 2
billion tonnes in India, the highest in the private sector
in India. The company is expected to become the
largest private sector coal mining company in India
once the captive coal mines become operational.

The company plans to sell the bulk of the Capital

generated through long term PPAs with distribution
companies and through Case I bids. The company has
also entered into long term contracts with industrial
consumers to supply Capital. The company has won
three of the four Ultra Mega Power Projects (Sasan
UMPP, Krishnapatnam UMPP & Tilaiya UMPP) awarded
by the Govt of India till date. The UMPP is an initiative
by the government to collaborate with Capital
generation companies to set up 4,000 MW projects to
ease the country’s power deficit situation.

Besides these, Reliance Capital is also considering the

development of coal bed methane (CBM) Capital
generation projects based from CBM blocks being
exposed by its affiliates. The company is also planning
to register projects with the Clean Development
Mechanism executive board for issuance of CER
certificates to augment its revenues.
 Company Profile

Incorporation
1995
Year
Chairman Anil Dhirubhai Ambani
Managing
Director
Company
Paresh Rathod
Secretary
Price Waterhouse/Chaturvedi &
Auditor
Shah
H Block First Floor,
Dhirubhai Ambani KnowledgeCity,
Registered Office
Navi
Mumbai, 400710, Maharashtra
Telephone 91-22-30386010/290
Fax 91-22-30376622/33
E-mail
reliancecapital.ipo@relianceada.com
Website http://www.reliancecapital.co.in

*LIQUIDITY RATIO

1. Current ratio (rupees in crore)

Current assets =6754.62

Current liability=35.68

Current ratio = current assets/current liability

=6754.62/35.68

=189.31
Interpretation

Gererally as arule of thumb a ratio of2:1 is considered

sound enough however it is not universally applicable .
in reliance capital co. The current ratio is very high .it is
189.31 which indicaits that the enterprise has more
finance than it need and is blocking its excess money is
ivested in large stock of raw material ,debtors finished
goods .

Thus ,a high current ratio means the enterprise has

more finance so they can use efficiently.

2 .Acid test ratio/Quick ratio

Current assets =6754.62

Current liability =35.68

Quick ratio =current assets – (investment+prepaid

expense)/current liability

=6754.62- 5126.25/35.68

= 1628.37/35.68

=45.6

INTERPRETATION

Current ratio and test ratio indicate the ability of the enterprise
to meet its current liability however the acid test ratio is better
indicator of liquidity . acid test ratio of reliance capital is
45.6.the acid test ratio of company is too much .it mmeans
company has to much finance available . company can easily
met their current liability.

3. Absolute liquid ratio

Absolute liquid assets =cash in hand+cash in bank
+marketable securities

Cash and bank =98.21

Current liability=35.68

Absolute liquid ratio =absolute liquid assets/current liability

=98.21/35.68

=2.75

INTERPRETATION

Absolute liquidity is represted by cash and near cash item .the

absolute liquid ratio are cash,bank and marketable securities .A
standard of 0.5:1 absolute liquidy is considered.the ratio of
absolute liquid ratio is 2.75 which show that company has too
much liquidy assets which is good for the company .it show a
good reputation in the market.

*profitability ratio

1. Gross profit ratio

Gross profit =289.4

Net sales =388

Gross profit ratio =gross profit/net sales*100

=289.4/388*100

=74.58%
 INTERPRETATION

Gross profit ratio indicate what extent the selling price of

goods per unit may be reduced without incurring losses on
operation .it reflect theefficiency with which a firm
produced its product. The ratio of company is 74.58 which
show that company producton is good according to thr-eir
ratio.

2. Net profit ratio

Net profit= 345.5

Net sales =388

Net profit ratio=net profit/net sales*100

=345.5/388*100

=89.04%

INTERPRETATION

Actually the business totally depend on the profit of the

company .Business is only run success if it earn profit. so
net profit ratio of this company is 89.04% which show that
company earn a huge net profit .it is good for the
company.

3. Operating ratio
Operating cost =COGS+ indirect expenses=96.96

Net profit = 388

Operating ratio=operating cost /net sales*100

=96.96/388*100

=24.98%

INTERPRETATION

Operating ratio indicate the relationship between

operating expenses and sales.the ratio indicate operating
efficiency of the organisation and it is important to the
management to evaluating its own efficiency.

The ratio of reliance capital is 24.98%which

indicate the efficiency of the organisation is good but not
better management should take more steps towards their
utilisation of their resources.

4. Return on investment

Net profit =616.8

Shareholder fund=14066

Return on investment=net profit/shareholder fund*100

 =616.8/14066*100

=4.38%

INTERPRETATION

Through this ratio company can measure the percentage

return to the company on the fund .it is also a good
indication of the profitability of the organisation .

The company has ratio of RETURN OF INVESTMENT is

4.38% this percentage is not sufficient for the company
because profit is a function of accounting and operating
policies of an enterprise.

5. Return on equity

Net profit=343.5

Preference share dividend=0

Share holder fund=14066

Return on equity =net profit-preference

dividend/shareholder fund*100

=343.5-0/14066*100

=2.44%

INTERPRETATION

Return on equity measure a corporation ,s profitability by

revailing how much profit a company generate with the
money shareholder have invested. The ratio of ROE is
indicating not good performansc in generating profit from
that amount which is invested by the shareholder.
*Activity /turnover ratio
1. Inventory turnover ratio

COGS=net sales-gross profit

=388-289.4

=98.6

Average stock=88.55

Inventory turnover ratio=COGS/average stock

=98.6/88.55 =1.09

INTERPRETATION

Inventory turnover ratio indicate that how many times a

company ,s inventory is sold and replaced over a period.A high
ratio implies either strong sales or effective buying. But
company ITR is 1.09 which show that company has low
turnover implies poor sales.

2. Debtor’s turnover ratio=net credit

purchase/average debtors
NOTE – there is no any credit purchase by the company so we
could not find. it.

3. Creditors turnover ratio =net credit

purchase/average creditor

Average payment period=365/CTR

NOTE – there is no any credit purchase by the company so we
could not find.

*solvency ratio
1. Debt to equity ratio

Debt=debenture + current liability

=0+35.68

=35.68

Equity=2396.80

Debt to equity ratio= total debt/equity

=14066/2396.80

=5.86

INTERPRETATION

Through this ratio company find out financial capital of

the company.A high debt to equity ratio generally means that a
company has been aggressive in financial its growth with
debt.if compny debt may increase more than than it may lead
to bankruotcy .

Company debt to equity ratio is not much which indicate

that company tatook debt according to their need.
 *coverage ratio

1. Inertest coverage ratio

EBIT=288.9

Interest charges= 1.69

Interest coverage ratio=earnings before interest

tax/interest charges

=288.9/1.69

=170.9

INTERPRETATION

Interest coverage ratio determine that how easily a company

can pay interest on outstanding debt .the lower the ratio ,the
company is burden by debt expense.but the reliance capital
company has interest coverage ratio is 170.9 which show that
company has no any debt or if company has any debt it can
easily met by the company.
 Year Mar 10
Sources of funds

Cash profit 274.05

Increase in equity 0
Increase in other networth 0
Increase in loan funds 0
Decrease in gross block 0
Decrease in investments 0
Decrease in working capital 658.72
Others 0
Total Inflow 932.77

Application of funds

Cash loss 0
Decrease in networth 0
Decrease in loan funds 0
Increase in gross block 2.44
Increase in investments 930.33
Increase in working capital 0
Dividend 0
Others 0
Total Outflow 932.77

Fund flow statement show the money inflow and money

outflow within a company.it is a very useful analytical tools for
analysing as to from where the fund came and how they were
used.

In reliance capital limited

INFLOW-

The fund flow statement show that their is a cash profit it

means that by selling company earn 274.05 crore . which mean
that their is inflow of cash. And the company ‘s working capital
decreasen by 658-72 crore it means that company ‘ current
assets will increase automatically. It means that their is a
inflow of cash . therefore in the company there is total inflow of
cash is 932.77 crore.

OUTFLOW

The fund flow also so that the fund which came in

company how that inflow of fund is used in the company.

In the company there is a gross block of 2.44 crore .which

mean that company had fund for the production purpose so
that’s why their is a out flow cash .and company ‘s investment
increase which show that company used their fund for
investment in oter sector.so their is a increase of of investment
of 930.33 crore.

Therefore in the company there is total outflow of cash is

932.77 crore.