Management Control System

Presented By:
GOURAV TIWARI YASHIKA DUBEY JASKARAN GAZAL GUPTA GHANSHYAM HARI JITESH HARSH SINHA
IBS Hyderabad

LOGO

ADAG
Anil Dheerubhai Ambani Group

RIL
Reliance Industries Ltd.

Organizational Structure
Reliance Petroleum Limited (RPL) Reliance Life Sciences Reliance Industrial Infrastructure Limited (RIIL) Reliance Logistics Reliance Clinical Research Services (RCRS)

Reliance Board Structure

Non- executive Director Non- executive Director Non- executive Director Executive Director Non- executive Director Executive Director

CEO Mr. Mukesh Ambani

Executive Director Non- executive Director Non- executive Director Non- executive Director Non- executive Director Executive Director

Reliance Reporting Hierarchy

FUNCTIONAL STRUCTURE
Employees within the functional divisions of an organization tend to perform a specialized set of tasks. Lack of communication between the functional groups . Best suited as a producer of standardized goods and services at large volume and low cost. Coordination and decision making within each function is centralized. Specialization increases as all the components are manufactured within the organization and are not outsourced.

MANAGEMENT STYLE AND CULTURE

RIL believes in ethical business, which rests on nine moral values. Believe in creating value for both its customers and stakeholders. High performance work culture rests on innovation, entrepreneurship, inclusiveness, teamwork and continuous improvements. Introduced TQM and Kaizen activities to improve the low productivity. Focuses on Corporate Governance to prioritize the transparency and accountability of the organization. Code of conduct for the BoD and board committees. Decision making authority given to individual units. Every unit in RIL has its own hierarchy.

Management Control Systems

Internal Control RIL has a comprehensive system of internal controls to safeguard the Companys assets against loss from unauthorized use and ensure proper authorization of financial transactions. The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls, and compliance with laws and regulations.

Accounting Process It is based on uniform accounting guideline that sets out accounting policies and significant processes and deadlines on a company wide basis. Budgetary control system The Company has a budgetary control system to monitor all expenditures against approved budgets on an ongoing basis. Healthy Standards RIL manufacturing facilities follows the policy of maintaining the highest standards of health, safety and environmental norms while maintaining operational integrity.

Internal audit function

The Company has an internal audit function, which is empowered : to examine the adequacy and compliance with policies, plans and statutory requirements. for assessing and improving the effectiveness of risk management, control and governance process. The management duly considers and takes appropriate action on the recommendations made by the statutory auditors, internal auditors and the independent Audit Committee of the Board of Directors.

Audit committee
Powers of the Audit Committee:
1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary

Role of Audit Committee

1. Oversight of the Companys financial reporting process 2. Recommending to the board 3. Reviewing with the management, the annual
3 financial statement before submission to board

4. Reviewing the adequacy of internal audit function 5. Reviewing the findings of any internal investigations 6. To look into the reasons for substantial defaults
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Roles of Audit Committee

7. Review the functioning of the Whistle Blower Mechanism 8.Review of uses /application of funds raised through an issue 9.To review the following information: Management discussion and analysis of financial Statement of significant related party transaction Management letters of internal control weakness The appointment, removal and terms of remuneration of internal auditors
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Recommendation
In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services

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FINANCIAL ANALYSIS

Satisfactory Current Ratio Quick Ratio 2:1 1:1

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 Current Ratio is less than satisfactory means short term financial position of the firm is not good.
Quick Ratio of the firm is also less than satisfactory means company is not in the position to pay its debts instantly.
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 Over the years the Gross profit ratio of the company has decreased which states that company is not well.

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 Over the years the Net profit ratio has decreased means expenses of the company like cost of sales, administration costs etc have increased.

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 Over the years operating margin of the company is decreased

which is not a good sign. It means that profit per Rupee of sales has decreased.
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 EPS of the company has come down over the years. Especially in 2010 EPS is almost half, but that is because of Bonus issue at 1:1 ratio.

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 Dividend per share initially increased till 2009 but decreased in 2010, this decrease is also because of the Bonus issue.

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CASH FLOW STATEMENT

KEY EVENTS INFLUENCING CASH FLOW

2006 Reliance Fresh Rs 25000 crore investment retail initiative 2007 acquire assets in Malaysia Consolidating global polyester 2008 Gas Discovery in Krishna basin and wins a Deep Water block in NELP VII 2009 Discovered natural gas reserves in a well drilled in Mahanadi basin, off the Orissa coast and raised around Rs 3,188 crore. 2010 Haryana Special Economic Zone (SEZ) Bought around 3 mn. barrels of spot crude from Brazilian company Petrobras Reliance Infocomm 4G spectrum

ACCOUNTING SYSTEMS
The financial systems at reliance are sap oriented The financials are prepared under historical cost conventions as per GAAP

1956
Fixed Assets are stated at cost , less accumulated depreciation Straight line method used to calculate depreciation

Long term investments are stated at cost

Items in inventories are measured at lower of cost or net realizable value

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ACCOUNTING SYSTEMS

Premium on redemption of bonds / debentures are adjusted against the Securities Premium Account. An impairment loss is charged to the Profit and Loss Account in the year All the account handling, payment, budget all the items are recorded in SAP program and evaluated.

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COORDINATION & COMMUNICATIONS

Reliance focuses on building life-long relationships with its stakeholders The Board of Directors determines strategic business imperatives and mentors the achievement of reliance corporate goals. The board executes its role in corporate governance through regular reviews of Reliances financial performance and critical business issues Better Coordination and communication is maintained in the organization with respect to partners involved in accounting system through different meeting.

Share Holders
Annual General Meetings (AGMs) Shareholders grievance meetings One-to-one meeting Open forum
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COORDINATION & COMMUNICATION

Customers
Market research External Customer satisfaction survey

Employees
Employees Suggestion Scheme Awards for Best case study learning Toolbox talks hh Self Development Modules Career progression / job rotation

/ role diversification
In-house newsletters shop floor communication meet'

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COORDINATION & COMUNICATION

COORDINATION & COMMUNICATIONS
Suppliers

Regulatory Authorities (sebi and stock exchanges)

Maintaining and updating all

Separate Contractors' Cell Monthly Contractors' Safety Meetings

records Support to local authorities hh in times of crisis Supporting neighboring industries through local associations

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LOGO

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