Reliance Capital Ltd’s consolidated net profit rose by just two per cent at Rs 415 crore in the fourth quarter ended March 2016, on a one-off creation of reserves in its life insurance unit, as buffer against falling interest rates.
It had posted a net profit of Rs 407 crore in January-March 2015.
Total income for the quarter was up 11 per cent to Rs 2,828 crore from Rs 2,542 crore in Q4 of FY15.
Its net profit for 2015-16 grew by 10 per cent at Rs 1,101 crore from Rs 1,001 crore in 2014-15. Total income grew 12 per cent to Rs 9,998 crore in FY16 from Rs 8,929 crore.
The board of directors has recommended a dividend of Rs 10 per share (of Rs 10 each) for 2015-16. Its net worth was up 12 per cent Rs 15,390 crore at end of March 2016.
Explaining the rationale for a one-time provision, Sam Ghosh, executive director and group chief executive, said the life insurance unit sells traditional products (that carry assured returns). The company has to make provisions when interest rates are falling.
Referring to RBI’s draft rules for on-tap licenses for universal banking, he said Reliance Capital is interested in banking activity. The company is examining the draft rules and would approach regulator for clarifications.
Meanwhile, it is looking at roping in strategic partner for its general insurance venture. At present RCPL owns 100 per cent stake in the general insurance company.
Reliance Capital is a part of the Reliance Group (with over 250 million customers). Reliance group has presence in financial services, telecom, energy, power, infrastructure, and Defence.
