CONSOLIDATED Corporate Management Governance Financial Notice Consolidated Financial Independent Auditors’ Report Overview Review Statements Statements TO THE MEMBERS OF RELIANCE INDUSTRIES by the Institute of Chartered Accountants of India together with LIMITED the ethical requirements that are relevant to our audit of the REPORT ON THE AUDIT OF THE CONSOLIDATED financial statements under the provisions of the Act and the Rules Independent Auditors’ Report on Financial Statements 313 Note FINANCIAL STATEMENTS thereunder, and we have fulfilled our other ethical responsibilities 1 Property, Plant and Equipment, Other Intangible 343 in accordance with these requirements and the Code of Ethics. Balance Sheet 326 Assets, Capital Work-In-Progress and Intangible Assets Under Development OPINION We believe that the audit evidence we have obtained is sufficient Statement of Profit and Loss 327 We have audited the accompanying Consolidated Financial and appropriate to provide a basis for our audit opinion on the 2 Investments – Non-Current 344 Statements of Reliance Industries Limited which includes joint Consolidated Financial Statements. 3 Loans – Non-Current 350 Statement of Changes in Equity 328 operations (hereinafter referred to as “the Holding Company”), its 4 Deferred Tax 350 subsidiaries (the Holding Company and its subsidiaries together EMPHASIS OF MATTER Cash Flow Statement 330 5 Other Non-Current Assets 351 referred to as “the Group”) its associates and joint ventures We draw attention to Note 1.8 of the Consolidated Financial Notes to the Financial Statements 332 6 Inventories 351 comprising of the consolidated Balance sheet as at March 31, Statements in respect of Composite Scheme of arrangement 7 Investments – Current 352 2020, the consolidated Statement of Profit and Loss, including approved by National Company Law Tribunal, Ahmedabad during 8 Trade Receivables 352 other comprehensive income, the consolidated Cash Flow the year. As per the Scheme, the Group has accounted the fair 9 Cash and Cash Equivalents 352 Statement and the consolidated Statement of Changes in Equity valuation impact of ` 38 crore to its retained earnings relating 10 Other Financial Assets – Current 353 for the year then ended, and notes to the Consolidated Financial to intangible assets under development, overriding the Indian 11 Other Current Assets 353 Statements, including a summary of significant accounting policies Accounting Standards. Our opinion is not modified in respect 12 Taxation 353 and other explanatory information (hereinafter referred to as “the of this matter. Consolidated Financial Statements”). 13 Share Capital 354 KEY AUDIT MATTERS 14 Other Equity 355 In our opinion and to the best of our information and according to Key audit matters are those matters that, in our professional 15 Borrowings – Non-Current 356 the explanations given to us and based on the consideration of judgement, were of most significance in our audit of the reports of other auditors on separate financial statements and on 16 Other Financial Liabilities – Non-Current 358 Consolidated Financial Statements for the financial year ended the other financial information of the subsidiaries, associates and 17 Deferred Payment Liabilities 359 March 31, 2020. These matters were addressed in the context of joint ventures, the aforesaid Consolidated Financial Statements 18 Provisions – Non-Current 359 our audit of the Consolidated Financial Statements as a whole, and give the information required by the Companies Act, 2013, as 19 Borrowings – Current 359 in forming our opinion thereon, and we do not provide a separate amended (“the Act”) in the manner so required and give a true and 20 Other Financial Liabilities – Current 360 opinion on these matters. For each matter below, our description of fair view in conformity with the accounting principles generally 21 Other Current Liabilities 360 how our audit addressed the matter is provided in that context. accepted in India, of the consolidated state of affairs of the Group, 22 Provisions – Current 360 its associates and joint ventures as at March 31, 2020, their We have determined the matters described below to be the key 23 Revenue From Operations 361 consolidated profit including other comprehensive income, their audit matters to be communicated in our report. We have fulfilled 24 Other Income 361 consolidated cash flows and the consolidated statement of changes the responsibilities described in the Auditors’ responsibilities for 25 Changes in Inventories of Finished Goods, 362 in equity for the year ended on that date. the audit of the Consolidated Financial Statements section of our Work-In-Progress and Stock-In-Trade report, including in relation to these matters. Accordingly, our audit 26 Employee Benefits Expense 362 BASIS FOR OPINION included the performance of procedures designed to respond 27 Finance Costs 366 We conducted our audit of the Consolidated Financial Statements to our assessment of the risks of material misstatement of the 28 Other Expenses 366 in accordance with the Standards on Auditing (SAs), as specified Consolidated Financial Statements. The results of audit procedures 29 Earnings Per Share (EPS) 367 under Section 143(10) of the Act. Our responsibilities under those performed by us and by other auditors of components not audited 30 Related Parties Disclosures 368 Standards are further described in the ‘Auditors’ Responsibilities by us, as reported by them in their audit reports furnished to us 31 Oil & Gas Disclosures 377 for the Audit of the Consolidated Financial Statements’ section by the management, including those procedures performed to 32 Contingent Liabilities and Commitments 380 of our report. We are independent of the Group, its associates address the matters below, provide the basis for our audit opinion and joint ventures in accordance with the ‘Code of Ethics’ issued on the accompanying Consolidated Financial Statements. 33 Capital Management 380 34 Financial Instruments 381 Key audit matter How our audit addressed the key audit matter 35 Segment Information 387 A. Capitalisation of property, plant and equipment 36 Enterprises Consolidated as Subsidiary in 389 During the year ended March 31, 2020, the Holding Company has Our audit procedures included and were not limited to the following: Accordance with Indian Accounting Standard 110 – incurred significant capital expenditure. Further, out of the total additions • Performed walk-through of the capitalisation process and tested the Consolidated Financial Statements to property, plant and equipment of ` 1,13,300 crore of the Holding design and operating effectiveness of the controls in the process. 37 Significant Enterprises Consolidated as Associates 396 Company in the current year, significant part of the capitalisation and Joint Ventures in Accordance with Indian pertains to the Gasification project, including modification of power plant • Assessed the nature of the additions made to property, plant and Accounting Standard 28 – Investments in Associates equipments i.e. Gas Turbines, Auxiliary Boilers, HRSGs, Process Furnaces, equipment and capital work-in-progress on a test check basis to test and Joint Ventures etc. to make them compatible to multiple feedstock, including those that they meet the recognition criteria as set out in para 16 to 22 of 38 Additional Information, as Required Under Schedule 399 received from petcoke gasifier. All units of the gasification complex and Ind AS 16, including any such costs incurred specifically for trial run. III to The Companies Act, 2013, Of Enterprises related integrated projects have been successfully commissioned and Consolidated as Subsidiary / Associates / Joint • Assessed that the borrowing cost capitalised (including foreign Ventures capitalised during the year. exchange loss to the extent it is considered as an adjustment to interest cost) is in accordance with the accounting policy of the 39 Assets and Liabilities Classified as Held For Sale 409 Holding Company. 40 Events after the Reporting Period 409 313 CONSOLIDATED Reliance Industries Limited Corporate Management Governance Financial Notice Independent Auditors’ Report Integrated Annual Report 2019-20 Overview Review Statements Key audit matter How our audit addressed the key audit matter Key audit matter How our audit addressed the key audit matter Significant level of judgement is involved to ensure that the aforesaid • Reviewed the project completion/handover certificate provided by Accordingly, the same is considered as a key audit matter. • As reported to us by the subsidiary auditor, they have performed capital expenditure/additions meet the recognition criteria of Ind AS 16 – the management to determine whether the asset is in the location procedures in relation to the approach used; test of controls The auditors of Reliance Holding USA Inc. (‘RHUSA’), subsidiary of the Property, Plant and Equipment, specifically in relation to determination of and condition necessary for it to be capable of operating in the performed with regard to data input into the system for calculation Holding Company have also reported a key audit matter on the aforesaid trial run period and costs associated with trial runs for it to be ready for manner intended by the management. of oil and gas reserves including the testing of IT controls and topic. intended use. • In respect of the key audit matter reported by the auditors of RJIL, information provided by the entity (IPE) on the IT application used for reserve and well data management;