Your Directors have pleasure in presenting the 32nd Annual Report and theaudited financial statement for the financial year ended March 31 2018.
Financial Performance and State of Company's Affairs
The standalone performance of the Company for the financial year ended March 31 2018is summarised below:
|Particulars ||Financial Year ended March 31 2018 ||*Financial Year ended March 31 2017 |
| ||(Rs in crore) ||(US$ in million**) ||(Rs in crore) ||(US$ in million**) |
|Total revenue ||3 315 ||510 ||2 071 ||319 |
|Profit before tax ||1 054 ||162 ||517 ||80 |
|Tax expense ||226 ||35 ||98 ||15 |
|Profit after tax ||828 ||127 ||419 ||65 |
|Add: Opening surplus in Statement of Profit and Loss ||2 437 ||374 ||2 101 ||324 |
|Profit available for appropriation ||3 265 ||502 ||2 520 ||389 |
|Transfer to statutory reserve fund ||166 ||25 ||84 ||13 |
*Previous year figures has been regrouped / reclassified wherever required.
**Exchange Rate Rs 65.0441= US$ 1 as on March 31 2018 (Rs 64.910 = US$1 as on March31 2017).
The Company's gross income for the financial year ended March 31 2018 increasedto Rs 3315 crore from Rs 2071 crore in the previous year increase of 60 percent.
The operating profit (PBDIT) of the Company increased by 53 per cent toRs 2910crore during the year fromRs 1904 crore in the previous year. Depreciation was at Rs 21crore as against Rs 27 crore in the previous year. The net profit for the year increasedby 98 per cent to Rs 828 crore from Rs 419 crore in the previous year. An amount of Rs166 crore was transferred to the Statutory Reserve Fund pursuant to Section 45-IC of theReserve Bank of India Act 1934.
Your Directors have recommended a dividend of Rs 11 (110 per cent) per equity shareeach of Rs 10 aggregating to
Rs 330 crore (inclusive of dividend tax) for the financial year ended March 31 2018which if approved at the ensuing 32nd Annual General Meeting (AGM)will be paid to (i) all those equity shareholders whose names appear in the Register ofMembers as on September 14 2018 and (ii) to those whose names appear as beneficialowners as on September 14 2018 as furnished by the National Securities DepositoryLimited and Central Depository Services (India) Limited for the purpose. The dividendpayout is in accordance with the Company's Dividend Distribution Policy which forms partof this Annual Report.
Core Investment Company
The Company in terms of Para 5 of Chapter III of Master Direction - CoreInvestment Companies (Reserve Bank) Directions 2016 made an application to theReserve Bank of India for registering itself as Systemically Important CoreInvestment Company (CIC-ND-SI The Company is awaiting Certificate of Registration(CoR') CIC-ND-SI and continues to position itself as CIC-ND-SI and complieswith the prudential norms applicable to CIC-ND-SI.
Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review as stipulated underthe Listing Regulations and Master
Circular - Non-Banking Financial Companies - Corporate Governance (Reserve Bank)Directions 2015 is presented in a separate section forming part of this Annual Report.
Resources and Liquidity
The Company's Net Worth as on March 31 2018 stood at
Rs 14006 crore. The Company has raised Rs 8351 crore during the financial year2017-18 by issuance of Commercial Papers Non-Convertible Debentures (NCDs) and othermoney market instruments.
During the year under review the Company has allotted 71882 equity shares arising outof the exercise of Employees Stock Options granted to the employees of the Company and itssubsidiaries.
RCL's debt equity ratio as on March 31 2018 stood at 1.48:1.
The Company has neither accepted nor renewed any fixed deposits during the year. Thereare no unclaimed deposits unclaimed / unpaid interest refunds due to the deposit holdersor to be deposited to the Investor Education and Protection Fund as on March 31 2018.
Particulars of Loans Guarantees or Investments
Pursuant to Section 186(11) of the Companies Act 2013 (the Act') loans made andacquisition of securities by a Non-Banking Financial Company in the ordinary courseof its business are exempted from disclosure in the Annual Report.
Subsidiary and Associate companies
During the year under review Reliance Health Insurance Limited became a subsidiary andReliance Asset Management (Mauritius) Limited Reliance Asset Management (Singapore) PteLimited and Reliance AIF Management Company Limited ceased to be subsidiaries of theCompany. Reliance Nippon Life Asset Management Limited ceased to be a subsidiary andbecame an associate and Quant Commodity Broking Private Limited ceased to be an associateof the Company. The performance and financial position of the major subsidiary companiesare presented in Management Discussion and Analysis Report forming part of this AnnualReport. Also a report on the performance and financial position of each of the subsidiaryand associate companies as per the Act is provided in the consolidated financialstatement. The Policy for determining material subsidiary companies may be accessed on theCompany's website at http://www.reliancecapital.co.in/pdf/Policy-for-Determination-of-Material-Subsidiary.pdf.
Reliance Home Finance
The Scheme of Arrangement under Sections 391 to 394 of the Companies Act 1956 (theScheme') for demerger of Real Estate Lending Business of the Company to RelianceHome Finance Limited (RHFL) has been sanctioned by the National Company Law TribunalMumbai Bench on August 10 2017. The Scheme became effective on September 5 2017 onfiling with the Registrar of Companies Maharashtra at Mumbai with effect from April 12017 i.e. Appointed Date. RHFL had issued and allotted to all equity shareholders of theCompany 1 (One) fully paid Equity Share of RHFL for every 1 (One) equity share of Rs 10each fully paid up held in the Company as on Record Date i.e. September 6 2017. Afterreceiving requisite approvals equity shares of RHFL were listed on the Stock Exchanges onSeptember 22 2017.
Reliance Nippon Life Asset Management (RNLAM)
Reliance Nippon Life Asset Management Limited on June 7 2017 made the initialpublic offer comprising a fresh issue and an offer for sale of its 61200000 equityshares of
Rs 10 each in the price band of Rs 247 to Rs 252. The IPO was oversubscribed 81times excluding the Anchor Investor Offer and the equity shares of RNLAM were listed onthe Stock Exchanges on November 6 2017.
Consolidated Financial Statement
The Audited Consolidated Financial Statement for the financial year ended March 312018 based on the financial statement received from subsidiary and associate companiesas approved by their respective Board of Directors have been prepared in accordance withAccounting Standard (AS) - 21 on Consolidated Financial Statements' read with AS-23on Accounting for Investments in Associates' notified under the Act read with theAccounting Standards Rules as applicable.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence as prescribed under the Act and theListing Regulations. The details of programme for familiarisation of Independent Directorswith the Company nature of the industry in which the Company operates and related mattersare put up on the website of the Company at the link http://www.reliancecapital.co.in/Policies.aspx.
In terms of the provisions of the Companies Act 2013 Mr. Jai Anmol AmbaniDirector of the Company retires by rotation and being eligible offers himself forre-appointment at the ensuing AGM. A brief resume of Mr. Jai Anmol Ambani along withrequisite details as stipulated under Regulation 36(3) of the Listing Regulations isgiven in the section on Corporate Governance Report forming part of this Annual Report.
Dr. Bidhubhusan Samal and Mr. V. N. Kaul who were appointed as Independent Director(s)of the Company by the Members for a term of 5 (five) years up to September 30 2019 andhave attained the age of seventy five years. In terms of the amended
Regulation 17 of the Listing Regulations vide SEBI Notification No.SEBI/LAD-NRO/GN/2018/10 dated May 9 2018 it is proposed to obtain Members' approval forcontinuation of directorship after April 1 2019 of Dr. Samal and Mr. Kaul as IndependentDirector(s) at the ensuing AGM.
Key Managerial Personnel
During the year there was no change in the Key Managerial Personnel.
Evaluation of Directors Board and Committees
The Company has devised a policy for performance evaluation of the individualDirectors Board and its Committees which includes criteria for performance evaluation.Pursuant to the provisions of the Act and Regulation 17(10) of the Listing Regulationsthe Board has carried out an annual performance evaluation of its own performance theDirectors individually as well as the evaluation of the working of the Committees of theBoard. The Board performance was evaluated based on inputs received from all the Directorsafter considering criteria such as Board composition and structure effectiveness of Board/ Committee processes and information provided to the Board etc. A separate meeting ofthe Independent Directors was also held during the financial year for the evaluation ofthe performance of non-independent Directors performance of the Board as a whole and thatof the Chairman. The Nomination and Remuneration Committee has also reviewed theperformance of the individual Directors based on their knowledge level of preparation andeffective participation in meetings understanding of their roles as directors etc.
Policy on appointment and remuneration for Directors Key Managerial Personnel andSenior Management Employees
The Nomination and Remuneration Committee of the Board has devised a policy forselection and appointment of Directors Key Managerial Personnel and SeniorManagement Employees and their Remuneration. The Committee has formulated the criteria fordetermining qualifications positive attributes and independence of a Director which hasbeen put up on the Company's website www.reliancecapital.co.in. The policy on the above isattached as Annexure - A.
Directors' Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Act with respect to Directors'Responsibility Statement it is hereby confirmed that: i. In the preparation of the annualfinancial statement for the financial year ended March 31 2018 the applicable AccountingStandards had been followed along with proper explanation relating to material departuresif any; ii. The Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2018 andof the profit of the Company for the year ended on that date; iii. The Directors had takenproper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; iv. TheDirectors had prepared the annual financial statement for the financial year ended March31 2018 on a going concern' basis; v. The Directors had laid down proper internalfinancial controls to be followed by the Company and such financial controls are adequateand are operating effectively; and vi. The Directors had devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.
Contracts and Arrangements with Related Parties
All contracts / arrangements / transactions entered into / by the Company during thefinancial year under review with related parties were on an arm's length basis and in theordinary course of business. There were no materially significant related partytransactions which could have potential conflict with interest of the Company at large.During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions. All Related PartyTransactions were placed before the Audit Committee as also the Board for approval. Prioromnibus approval of the Audit Committee was obtained for the transactions which were of arepetitive nature. The transactions entered into pursuant to the omnibus approval sogranted were reviewed and statements giving details of all related party transactions wereplaced before the Audit Committee and the Board of Directors on quarterly basis. Thepolicy on Related Party Transactions as approved by the Board is uploaded on the Company'swebsite at the link http://www.reliancecapital.co.in/pdf/Policy_for_Related_Party_Transaction.pdf. Your Directors draw attention of the members to Note No. 34to the Financial Statement which sets out related party disclosures.
Material Changes and Commitments if any affecting the financial position of theCompany
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thisReport.
Meetings of the Board
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year seven Board Meetings were held details of meetings held and attended by eachDirector are given in the Corporate Governance Report.
The Audit Committee of the Board consists of Independent Directors namely Mr. RajendraP. Chitale Chairman Dr. Bidhubhusan Samal Mr. V. N. Kaul Ms. Chhaya Virani Non-IndependentDirector Mr. Amitabh Jhunjhunwala and Executive Director Mr. Jai Anmol Ambani asmembers. During the year all the recommendations made by the Audit Committee wereaccepted by the Board.
Auditors and Auditors' Report
M/s. Pathak H.D. & Associates Chartered Accountants and M/s. PriceWaterhouse & Co Chartered Accountants LLP Chartered Accountants were appointed asAuditors of the Company for a term of 5 (five) consecutive years at the Annual GeneralMeeting of the Company held on September 27 2016 and September 26 2017 respectively.The Company has received letters from M/s. Pathak H.D. & Associates CharteredAccountants and M/s. Price Waterhouse & Co Chartered Accountants LLP that they arenot disqualified from continuing as Auditors of the Company.
The Notes on Financial Statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The observations and commentsgiven by the Auditors in their Report read together with notes on Financial Statements areself-explanatory and hence do not call for any further comments under Section 134 of theAct.
Maintenance of Cost Records
The Central Government has not specified maintenance of cost records for any ofthe products of the Company under Section 148(1) of the Act.
During the year under review the Company has complied with the applicable SecretarialStandards issued by The Institute of Company Secretaries of India.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointedM/s. Aashish K. Bhatt & Associates Practicing Company Secretaries to undertake theSecretarial Audit of the Company. There is no qualification reservation or adverse remarkmade in their Secretarial Audit Report. The Audit Report of the Secretarial Auditor isattached as Annexure B.
Extract of Annual Return
Extract of the Annual Return of the Company in form MGT-9 is attached as Annexure - C.
Particulars of Employees and related disclosures (a) Employees Stock Option Scheme(s)
Employees Stock Option Scheme(s) (ESOS 2015 and ESOS 2017) were approved andimplemented by the Company and Options were granted to the employees in accordancewith guidelines applicable to ESOS. The Nomination and Remuneration Committee of the Boardmonitors the Scheme. The existing ESOS Scheme and Plans are in compliance with theSecurities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014(SEBI Regulations).
The Company has received a certificate from the Auditors of the Company that the ESOS2015 and ESOS 2017 have been implemented in accordance with the SEBIRegulations and as per the resolution passed by the members of the Company authorisingissuance of the said Options. The details as required to be disclosed under SEBIRegulations are put on the Company's website athttp://www.reliancecapital.co.in/ESOS-Disclosure.aspx.
(b) Other Particulars
In terms of the provisions of Section 197(12) of the Act read with Rule 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended a statement showing the names and other particulars of the employees drawingremuneration in excess of the limits set out in the said Rules are provided in the AnnualReport which forms part of this Report. Disclosures relating to the remuneration andother details as required under Section 197(12) of the Act read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended are also provided in the Annual Report which forms part of this Report.
However having regard to the provisions of first proviso to Section 136(1) of the Actthe Annual Report excluding the aforesaid information is being sent to all the members ofthe Company and others entitled thereto. The said information is available for inspectionat the registered office of the Company on all working days except Saturdays between11:00 A.M. and 1:00 P.M. up to the date of the Meeting. Any member interested in obtainingthe same may write to the Company Secretary and the same will be furnished on request.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The Company is a Non-Banking Financial Company and does not involve in anymanufacturing activity most of the information as required under Section 134(3)(m) of theAct read with Rule 8 of the Companies (Accounts) Rules 2014 are not applicable. Howeverthe information as applicable has been given in Annexure D forming part of thisReport.
The Company has adopted Reliance Group-Corporate Governance Policies and Code ofConduct' which sets out the systems processes and policies conforming to theinternational standards. The report on Corporate Governance as stipulated under Regulation34(3) read with Para C of Schedule V of the Listing Regulations is presented in separatesection forming part of this Annual Report. A Certificate from the Auditors of the CompanyM/s. Pathak H.D. & Associates Chartered Accountants and M/s. Price Waterhouse &Co Chartered Accountants LLP confirming compliance to the conditions of CorporateGovernance as stipulated under Para E of Schedule V of the Listing Regulations isenclosed to this Report.
Ombudspersons & Whistle Blower (Vigil Mechanism)
The Company has formulated an Ombudspersons & Whistle Blower (Vigil Mechanism)policy to address the genuine concerns if any of the Directors and employees. Thedetails of the same have been stated in the Report on Corporate Governance and the policycan be accessed on the Company's website.
The Company has laid down a robust Risk Management Policy defining Risk profilesinvolving Strategic Technological Operational Financial Organisational Legal andRegulatory risks within a well defined framework. The Risk Management Policy acts as anenabler of growth for the Company by helping its businesses to identify the inherentrisks assess evaluate and monitor these risks continuously and undertake effective stepsto manage these risks. A Risk Management Committee consisting of Mr. V. N. Kaul Chairmanand Ms. Chhaya Virani as member periodically reviews the robustness of the RiskManagement Policy. The periodical update on the risk management practices and mitigationplan of the Company and subsidiaries are presented to the Audit Committee and Board ofDirectors. The Audit Committee and Board periodically review such updates and findings andsuggest areas where internal controls and risk management practices can be improved. Moredetails on Risk Management indicating development and implementation of Risk ManagementPolicy including identification of elements of risk and their mitigation are covered inManagement Discussion and Analysis section which forms part of this Report.
Compliance with provisions of Sexual Harassment of Women at workplace (PreventionProhibition and Redressal) Act 2013
The Company is committed to uphold and maintain the dignity of woman employees and ithas in place a policy which provides for protection against sexual harassment of women atwork place and for prevention and redressal of such complaints. During the year no suchcomplaints were received. The Company has also constituted an Internal ComplianceCommittee under the Sexual Harassment of Women at workplace (Prevention Prohibition andRedressal) Act 2013.
Corporate Social Responsibility
The Company has constituted Corporate Social Responsibility (CSR) Committee incompliance with the provisions of Section 135 of the Act read with the Companies(Corporate Social Responsibility Policy) Rules 2014. The Corporate Social ResponsibilityCommittee has formulated a Corporate Social Responsibility Policy (CSR policy) indicatingthe activities to be undertaken by the Company. The CSR policy may be accessed on theCompany's website at the link; http://www.reliancecapital.co.in/pdf/Group_CSR_Policy_Document.pdf.
The CSR Committee consists of Dr. Bidhubhusan Samal as Chairman Mr. AmitabhJhunjhunwala Mr. V. N. Kaul and Mr. Jai Anmol Ambani as members. The disclosureswith respect to CSR activities is given in Annexure - E.
Order if any passed by Regulators or Courts or Tribunals
No orders have been passed by the regulators or courts or tribunals impacting the goingconcern status and the Company's operations.
Internal Financial Controls and their adequacy
The Company has in place adequate internal financial controls across the organization.The same is subject to review periodically by the internal audit cell for itseffectiveness. During the year such controls were tested and no reportable materialweakness in the design or operation were observed.
Business Responsibility Report
Business Responsibility Report for the year under review as stipulated under theListing Regulations is presented in the separate section forming part of this AnnualReport.
Your Directors would like to express their sincere appreciation for the co-operationand assistance received from shareholders debenture holders debenture trustee bankersfinancial institutions regulatory bodies and other business constituents during the yearunder review. Your Directors also wish to place on record their deep sense of appreciationfor the commitment displayed by all executives officers and staff resulting in thesuccessful performance of the Company during the year.
| ||For and on behalf of the Board of Directors |
| ||Anil Dhirubhai Ambani |
| ||Chairman |
|Mumbai || |
|August 10 2018 || |