1. Corporate Governance Assesment
Reliance Industries Limited

2. Framework to assess Corporate
Governance

3. Framework to assess Corporate
Governance

4. Parameter Measurement
Rating wrt wealth creation for stakeholders
Very High Level 1
High Level 2
Strong Level 3
Moderate Level 4
Adequate Level 5
Society Level 6
Poor Level 7
Lowest Level 8

5. Equitable treatment of shareholders

6. Shareholding Pattern At A Glance
Share Holding Pattern of Reliance
Industries Limited as on 30th June 2009
Promoters’ Holding 49.03
3.15
22.02
Non Promoters’ Holding (MF, 25.8 49.03
FII, Foreign Institutional
25.8
Investors)
Others (Private Corporate 22.02
Bodies, Indian Public, NRIs and
OCBs, Subsidiary companies)
Promoter Holding
Shares held by Custodians 3.16 Non Promoter's Holding
Others
Source : Reliance Industries Ltd.
Corporate website Shares held by Custodians

7. Safeguarding interest of minority
stakeholders
• Shareholders'/ Investors' Grievance
Committee
• Corporate Governance and Stakeholders'
Interface Committee
• Transparency and accountability
• Fair and equitable treatment of all its
stakeholders
• Compliance with all the applicable rules and
regulations

8. Safeguarding interest of minority
stakeholders : Issues
 Complex web of shareholdings and crossholdings
among members of the Ambani family and
subsidiaries
 Influence of Mukesh Ambani over directors of
most of the companies and subsidiaries within the
group
 group keeps changing the status of different
companies from subsidiaries to associates and
vice versa

9. Insider Trading: Prevention
Measures
• Directors are required to give disclosures in
terms of Companies Act 1956 and Reliance
code of conduct of Prohibition of insider
trading.
• Whistle Blower Mechanism:
• The company promotes ethical behaviour in
all its business activities and has put in place
mechanism of reporting illegal or unethical
behaviour.

10. Insider Trading : Issues
• SEBI probe found violating regulations on
insider trading norms and other rules related
to prevention of fraudulent and unfair
practices.
• After the merger of RPL with RIL, Sebi issued a
show-cause notice to RIL, following a probe
into alleged insider trading in Reliance
Petroleum Ltd (RPL) shares in November 2007.

11. Parameter Rating
Rating for Equitable treatment of shareholders
S. No. Governance Parameters Rating
Equitable treatment of shareholders
The interest of minority shareholders Level 3
Disclosure of shareholding pattern Level 2
Detect and prevent insider trading Level 4
Average Rating Level 3

12. Ownership rights of shareholders

13. Ownership rights of shareholders
• Compliance with the law
– RIL has complied with the conditions of Clause 49 of the Listing Agreement.
• Presence of anti takeover provisions
– Secretarial audit takes in to consideration compliance with the SEBI
Act, 1992.
– Secretarial audit is conducted every quarter and annual report is included
in annual audit report.
• Preferential rights for any shareholders
– Audit takes in to consideration of the issue and rights of the preferential
shareholders if any. Warrants issued in April, 2007 are in accordance with
SEBI Guidelines, 2000.
– 12 cr. warrants issued in April, 2007 are in accordance with SEBI
Guidelines, 2000.
• Voting Rights
– RIL provides provision for passing special resolution through Postal ballots.

14. Ownership rights of shareholders
• Shareholders participation in the meetings
– Notices for venue and date of AGM and EGM are sent to all equity
shareholder of the company under companies act, 1956. The same is
published at company’s official website.
– Venue, date and special resolution passed in the last three years are
published in the corporate governance report.
• Shareholder rights
– Half yearly financial Reports sent to the Members at their address
registered with the Company. The Company has established policies
and procedures for corporate communication and disclosures.
– Printed copy of the Chairman’s Speech is distributed to all the
shareholders at the Annual General Meetings. It is also sent to all
shareholders who do not attend the Annual General Meeting. The
same is also placed on the website of the Company.

15. Parameter Rating
Rating for Ownership rights of shareholders
S. No. Governance Parameters Rating
Ownership rights of shareholders
Compliance with Law Level 2
Presence of anti-takeover provisions Level 2
Preferential rights of shareholders Level 2
Voting Rights Level 2
Shareholder participation in meetings Level 2
Average Rating Level 2

16. Composition of Board

17. Composition of Board
• Board Structure, strength and Size
• Compliance with clause 49 (structure and size)
• Right mix of various capabilities
• Selection Criteria, Tenure, and Age Limit of
Directors
• Not defined
• Composition of Sub committees
• Statutory Committees (Audit Committee etc.)
• Non- mandatory committees (Remuneration etc)

18. Holding position No of shares as on
Name Category
since 31 March 2008
Total / % of total
# of directors
Mukesh D. Ambani
Promoter Director 18,07,923 shares
(CMD)
July 01, 1988
Nikhil R. Meswani (Whole Time 1,21,174 shares
Director)
4 / 30.77% August 4, 1995
Hital R. Meswani Executive Directors (Whole-time 87,930 shares
Director )
April 1, 2000
Hardev Singh Kohli (Whole-time 1,155 shares
Director )
Non-Executive
Ramniklal H. Ambani Non-Independent 1 / 7.69% January 11, 1977 84,397 shares
Directors
September 27,
Mansingh L. Bhakta 1,57,000 shares
1977
Yogendra P. Trivedi April 16, 1992 12,200 shares
March 28, 2001., 6,799 shares
Dr. DharamVir Kapur
Independent
Mahesh P. Modi 8 / 61.54% March 28, 2001. 562 shares
Directors
S. Venkitaramanan June 27, 1997 NIL
Prof. Ashok Misra April 27, 2005 220 shares
Prof. Dipak C. Jain August 4, 2005 NIL
June
Dr. Raghunath A. Mashelkar NIL
9, 2007
Total 13 / 100%

19. Parameter Rating
Rating for Composition of Board
S. No. Governance Parameters Rating
Composition of Board
Board Structure, Strength, and Size Level 2
Election term, Disclosure of Tenure, and
Age Limit of Directors Level 3
Composition of sub-committees Level 3
Average Rating Level 3

20. Functioning of Board

21. Functioning of Board
• Overseeing Management Performance
• Board meetings
• Assessing Board Effectiveness
• Post-Board Meeting Follow-Up System and
Compliance of the Board Procedure
• Means of Communication and General Shareholder
Information
• Contribution of Independent Directors

22. Parameter Rating
Rating for Functioning of Board
S. No. Governance Parameters Rating
Functioning of the Board
Level 2
Overseeing Management performance
Level 3
Assesing board effectiveness
Level 3
Contribution of independent Directors
Average Rating Level 3

23. Management Assessment

24. Reputation and profiles of the
management
– Mr. Mukesh D. Ambani is a Chemical Engineer from the University of Bombay
and pursued MBA from Stanford University, USA. He is the Chairman of
Reliance Petroleum Ltd and Reliance Retail Ltd and a Director of Reliance
Europe Ltd, KDA Enterprises Private Limited and Pratham India Education
Initiative.
– Mr. Nikhil R Meswani is a Chemical Engineer. He is the son of one of the
founding directors of the company. In recognition of his far reaching vision,
management skills, innovative ideas, untiring efforts and dynamic leadership.
– Mr. Hital R. Meswani graduated with honours in the Management &
Technology programme from University of Pennsylvania. He received a B.S.
Degree in Chemical Engineering and B.S. Economics from the Wharton
Business School, both from University of Pennsylvania, U.S.A.
– Mr. Hardev Singh Kohli is a MSc. He has wide experience in implementation
and operation of fertilizers and petrochemicals plants. He is Recipient of
Rotary Centennial Service Award for Professional Excellence from Rotary
International. He is listed as one of the Leading Lawyers of Asia for 2006 and
2007 by Asialaw, Hongkong.

25. Assessment of past strategies
• Success
– Exploration of gas in the Krishna-Godavari basin.
– Large expansion in the polyester business.
– Setting up of innovation council which led to the 19th ranking of RIL in the
list of ‘World’s 25 most innovative companies’ from Business week and
BCG.
– Successful acquisitions in international market e,g, GAPCO
– In the ‘Management discussion and Analysis section’ of the Annual
Report, Company has presented a detailed analysis of major business of
Reliance Industries e.g.- Exploration and Production, Petroleum and
Retail business.
– Opportunities have been identified in the respective sectors and
strategies have also been laid out to capture opportunities and fight the
challenges. e.g. – increasing trend of green fuel, promotion of SEZ’s.

26. Assessment of past strategies
• Failures
– Diversification into organized retail business
through RRL (Reliance Retail Limited) wasn’t
successful.
– Reliance Petrol Retail operations met with
resistance and company was forced to close its
petrol pump across the country.

27. Parameter Rating
Rating for Management Assessment
S. No. Governance Parameters Rating
Management Assessment
Level 1
Reputation and profiles of Management
Level 2
Assessment of past strategies
Level 2
Average Rating

28. Transparency and Disclosures

29. Transparency and Disclosures
Issues
• Control’ Model of Governance
• Related party transactions- With its Subsidiaries and Associates
• Scheme of Amalgamation of RPL with RIL.
• RIL's suit with RNRL.

30. Transparency and Disclosures
• Disclosure of Definition of Independent Directors, Financial
Experts and Selection Criteria for Board Members Including
Independent Directors
• Move of the management aims at ensuring increased level of
transparency for stakeholders
– Corporate Governance and Stakeholders’ Interface
Committee
– Employees Stock Compensation Committee
– The Health, Safety and Environment Committee
• Compliance certificate by the SEBI on matter related to capital
markets

31. Parameter Rating
Rating for Transparency and Disclosures
S. No. Governance Parameters Rating
Transparency & Disclosure
completeness, quality and clarity of
reporting Level 1
Related party transactions Level 4
Independence of the auditor Level 2
Adequacy/Effectiveness of internal audit Level 2
Disclosure of Independent Directors Level 2
Model of Governance Level 4
Governing body Compliance related to
capital markets Level 2
Transparency for stakeholders Level 2
Average Rating Level 3

32. Value creation for Stakeholders

33. Value creation for stakeholders

34. Value creation for stakeholders
• Customer
– Largest producer of Polyester fibre and yarn (global market share 7%)
– 6th largest producer of Mono Ethylene Glycol (MEG)
– 7th largest producer of Polypropylene (PP)
• Employee

35. Value creation for stakeholders
• Society
– Education
– Health
– Community Development
– Environment
– People

36. Parameter Rating
Rating for Value creation for stakeholders
S. No. Governance Parameters Rating
Value Creation for various stakeholders
Shareholder Level 2
Debt holder Level 3
Customers Level 2
Employee Level 2
Supplier Level 2
Society Level 2
Average Rating Level 2

37. Corporate Governance Rating
Evaluation of Corporate Governance practices of RIL for the
year 2007-08
S. No. Governance Parameters Rating
Equitable treatment of shareholders Level 3
Ownership rights of shareholders Level 2
Composition of the Board Level 3
Functioning of the Board Level 3
Management Assessment Level 2
Transparency & Disclosure Level 3
Value Creation for various stakeholders Level 2
OVERALL CORPORATE GOVERNANCE LEVEL 3 (Strong)
RATING

38. Final Conclusion
• Reliance Industries Limited(RIL) has ‘strong’
corporate governance practices with a ‘Level
3’ rating, which means that while it appears to
have done well , but there is still scope for
improvement in the level of corporate
governance standards and quality of
disclosures to be practiced in the company.

39. References
• ELCC handouts of Prof. Chalil, XLRI Jamshedpur
• Reliance Industries Limited – Corporate Governance Report
2007-08
• CRISIL Corporate Governance Rating Criteria
• Book: ICSI Corporate Governance (Best Practices)
• Article: Corporate Governance Standards and Practices in
Reliance Industries Limited - The ICFAI University Journal of
Corporate Governance – July’08 Edition
• http://www.clause49.com/clause49.htm
• http://www.thehindubusinessline.com/iw/2005/07/03/storie
s/2005070300160600.htm
• http://www.zeenews.com/news543038.html

40. Feedback & Questions !!
THANK YOU