Your Directors present the 34th Annual Report and the audited financial statement for the financial year ended March 31 2020.
Financial Performance and State of Company's Affairs
The standalone performance of the Company for the financial year ended March 31 2020 is summarised below:
|(Rs. in crore)||(Rs. in crore)|
|Total revenue||1 393||2 317|
|Profit/(Loss) before tax||(5 465)||157|
|Profit/(Loss) after tax||(5 465)||157|
|Add: Opening surplus in statement of profit and loss||(2 296)||(2 093)|
|Profit/(loss) available for appropriation||(7 761)||(1 936)|
|Transfer to statutory reserve fund**||-||31|
* Previous year figures has been regrouped/reclassified wherever required.
** No amount was transferred to the Statutory Reserve Fund pursuant to Section 45-IC of the Reserve Bank of India Act 1934 as company has incurred loss during the year
Core Investment Company
The Company is a Core Investment Company (`CIC') registered with Reserve Bank of India under the Master Direction - Core Investment Companies (Reserve Bank) Directions 2016.
During the year under review the Board of Directors has not recommended any dividend on the Equity Shares of the Company.
Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (the `Listing Regulations') and Guidelines on Corporate Governance issued by the Reserve Bank of India is presented in a separate section forming part of this Annual Report.
The Company has neither accepted nor renewed any fixed deposits during the year. There are no unclaimed deposits unclaimed/unpaid interest refunds due to the deposit holders or to be deposited to the Investor Education and Protection Fund as on March 31 2020.
Resources and Liquidity
During the year the Company has issued Non-Convertible Debentures aggregating to Rs.1 crore and redeemed Non-Convertible Debentures aggregating to Rs.1592 crore. Since September 2018 due to sudden adverse developments in the financial sector all categories of lenders in India (including Banks Mutual Funds etc.) had put near complete freeze on additional lending to Non-Banking Financial Companies (NBFCs) and have been insisting for reducing the existing level of borrowings which has severely impacted the financial flexibility of majority of NBFCs.
These developments had also adversely impacted the Company resulting into temporary liquidity mismatches which led to rating downgrades. Following this various lenders and debenture holders demanded immediate repayment that were otherwise due and payable in a phased manner over the next 8 years leading to delay/default in repayment. The Company is engaged with debenture holders to arrive at a resolution by monetization of its assets and unlock the value of its underlying businesses and thereby significantly reduce its overall leverage subject to approvals from courts creditors and regulatory authorities.
Particulars of Loans Guarantees or Investments
The Company is registered as Core Investment Company with RBI. Thus the provision of Section 186 except sub-section (1) of the Act is not applicable to the Company.
Subsidiary and Associate companies
During the year under review Reliance Underwater Systems Private Limited became a subsidiary of the Company and Reliance Capital Trustee Co. Limited Reliance Capital AIF Trustee Company Private Limited ceased to be the subsidiaries and Reliance Nippon Life Asset Management Limited ceased to be an associate of the Company. Reliance Home Finance Limited ceased to be subsidiary and become an associate and Reinplast Advance Composites Private Limited and Global Wind Power Limited become associates of the Company.
The summary of the performance and financial position of the each of the subsidiary and associate companies are presented in Form AOC-1 and of major subsidiaries and associates are mentioned in Management Discussion and Analysis Report forming part of this Annual Report. Also a report on the performance and financial position of each of the subsidiary and associate companies as per the Act is provided in the consolidated financial statement. The Policy for determining material subsidiary companies may be accessedontheCompany'swebsiteathttp://www.reliancecapital. co.in/pdf/Policy-for-Determination-of-Material-Subsidiary. pdf.
Standalone and Consolidated Financial Statement
The audited financial statement of the Company drawn up both on standalone and consolidated basis for the financial year ended March 31 2020 are in accordance with the requirements of the Companies (Indian Accounting Standards) Rules 2015 Ind AS Rules prescribed under Section 133 of the Companies Act 2013 read with the relevant rules and other accounting principles. The Consolidated Financial Statement have been prepared in accordance with Ind AS and relevant provisions of the Act based on the financial statement received from subsidiary and associate companies as approved by their respective Board of Directors.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed under the Act and Listing Regulations. The details of programme for familiarization of Independent Directors with the Company nature of the industry in which the Company operates and related matters are put up on the website of the Company at the link http://www.reliancecapital.co.in/cg_ policies.html.
Mr. A N Sethuraman was appointed as an Additional Director of the Company with effect from December 13 2019 and Mr. Dhananjay Tiwari Chief Executive Officer of the Company was appointed as an Additional Director of the Company with effect fromJanuary 21 2020 to hold office as Director upto the date of ensuing Annual General Meeting of the Company. The Company has received notices under Section 160 of the Act from a member proposing their candidature for the office of Director of the Company liable to retire by rotation.
A brief profile of Mr. A N Sethuraman and Mr. Dhananjay Tiwari along with the requisite details as stipulated under Regulation 36(3) of the Listing Regulations is given in the Notice and section on Corporate Governance Report forming part of thisAnnual report. During the year under review the shareholders of the Company has appointed Mr. Rahul Sarin and Dr.Thomas Mathew as Independent Directors of the Company for a period of 5 years with effect from August 16 2019 and re-appointed Ms. Chhaya Virani as an Independent Director for a second term of 5 consecutive years with effect from May 29 2020.
In order to enable the Company to comply with the requirements of Regulation 17(1B) of the SEBI (LODR) Regulations 2015 Mr. Anmol Ambani being related to the Chairperson of the Company ceased to be the Executive Director of the Company with effect from December 10 2019. Ms. Ryna Karani was appointed as a Non-executive Director w.e.f. September 30 2019 who held office as such till December 13 2019. The Board places on record its deep sense of appreciation for the guidance and invaluable contribution made by the Directors during their tenure as Director of the Company.
In the opinion of the Board the Independent Directors possess the requisite expertise and experience and are the persons of high integrity and repute. They fulfil the conditions specified in the Companies Act 2013 and the Rules made thereunder and are independent of the management.
Key Managerial Personnel (KMP)
Mr. Dhananjay Tiwari was appointed as the Chief Executive Officer with effect from January 21 2020.
Mr. Amit Bapna former Chief Financial Officer (CFO) was elevated to the position of President & Chief Operating Officer and Mr. Vaibhav Kabra was appointed as the CFO with effect from December 10 2019.
Mr. Sachin Bora who was appointed as Chief Executive Officer on December 10 2019 voluntarily retired early due to unforeseen critical health issues with effect from December 27 2019.
Evaluation of Directors Board and Committees
The Nomination and Remuneration Committee (NRC) of the Company has devised a policy for performance evaluation of the individual directors Board and its Committees which includes criteria for performance evaluation.
Pursuant to the provisions of the Act and the Listing Regulations and based on policy devised by the NRC the Board has carried out an annual performance evaluation of its own performance its committees and individual directors. The Board performance was evaluated based on inputs received from all the Directors after considering criteria such as Board composition and structure effectiveness of Board and information provided to the Board etc.
The performance of the committees was evaluated by the Board of Directors based on inputs received from all the committee members after considering criteria such as composition and structure of committees effectiveness of committee meetings etc.
Pursuant to the Listing Regulations performance evaluation of independent directors was done by the entire board excluding the independent director being evaluated.
A separate meeting of the Independent Directors was also held for the evaluation of the performance of non-independent Directors performance of the Board as a whole and that of the Chairman of the Board.
Policy on appointment and remuneration for Directors Key Managerial Personnel and Senior Management Employees
The Nomination and Remuneration Committee of the Board has devised a policy for selection and appointment of Directors Key Managerial Personnel and Senior Management Employees and their Remuneration. The Committee has formulated the criteria for determining qualifications positive attributes and independence of a Director which has been put up on the Company's website www.reliancecapital.co.in. The policy on the above is attached 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 annual financial statement for the financial year ended March 31 2020 the applicable Accounting Standards had been followed along with proper explanation relating to material departures if any;
ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31 2020 and of the loss of the Company for the year ended on that date;
iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. The Directors had prepared the annual financial statement for the financial year ended March 31 2020 on a `going concern' basis;
v. The Directors had laid down proper internal financial controls to be followed by the Company and such financial controls are adequate and are operating effectively. The Company is taking constant steps to further strengthen the same; and
vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Contracts and Arrangements with Related Parties
All contracts/arrangements/transactions entered into/by the Company during the financial year under review with related parties were on an arm's length basis and in the ordinary course of business.
There were no materially significant related party transactions 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 the policy of the Company on materiality of related party transactions.
All Related Party Transactions were placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which were of a repetitive nature. The transactions entered into pursuant to the omnibus approval so granted were reviewed and statements giving details of all related party transactions were placed before the Audit Committee and the Board of Directors on quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website 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. 36 to the Financial Statement which sets out related party disclosures.
Material Changes and Commitments if any affecting the financial position of the Company
There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this Report.
Meetings of the Board
A calendar of Meetings is prepared and circulated in advance to the Directors. During the financial year seven Board Meetings were held. Details of meetings held and attended by each Director are given in the Corporate Governance Report.
The Audit Committee of the Board consists of Independent Directors namely Ms. Chhaya Virani as the Chairperson Mr. Rahul Sarin Dr. Thomas Mathew and Director & Chief Executive Officer of the Company Mr. Dhananjay Tiwari as Members. During the year all the recommendations made by the Audit Committee were accepted by the Board.
Auditors and Auditors' Report
M/s. Pathak H.D. & Associates LLP Chartered Accountants was appointed as Auditor of the Company for a term of 5 (five) consecutive years at the Annual General Meeting of the Company held on September 27 2016. The observations and comments given by the Auditors in their Report read together with notes on Financial Statement are self-explanatory and hence do not call for any further comments under Section 134 of the Act.
Secretarial Audit and Secretarial Compliance Report
Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointed M/s. Aashish K. Bhatt & Associates Practicing Company Secretaries to undertake the Secretarial Audit of the Company.The Audit Report of the Secretarial Auditor is attached as Annexure - B.
Pursuant to circular No. CIR/ CFD/ CMD1/ 27/ 2019 dated February 8 2019 issued by Securities and Exchange Board of India (SEBI) the Company has obtained Secretarial Compliance Report from Practicing Company Secretaries on compliance of all applicable SEBI Regulations and circulars/guidelines issued thereunder and the copy of the same shall be submitted with the Stock Exchanges within the prescribed due date.
The observations and comments given by the Secretarial Auditor in their Report are self-explanatory and hence do not call for any further comments under Section 134 of the Act.
During the year under review the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Maintenance of Cost Records
The Central Government has not specified maintenance of cost records for any of the products of the Company under Section 148(1) of the Act.
As required under Section 134(3)(a) of the Act the Annual Return for the financial year 2018-19 and 2019-20 is put up on the Company's website and can be accessed at https://www.reliancecapital.co.in/Annual-Reports.aspx.
Particulars of Employees and related disclosures
(a) Employees Stock Option Scheme(s)
Employees Stock Option Scheme(s) (ESOS 2015 and ESOS 2017) were approved and implemented by the Company and Options were granted to the employees in accordance with guidelines applicable to ESOS. The Nomination and Remuneration Committee of the Board monitors the Scheme.
The existing ESOS Scheme and Plans are in compliance with the Securities 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 ESOS 2015 and ESOS 2017 have been implemented in accordance with the SEBI Regulations and as per the resolution passed by the members of the Company authorising issuance of the said Options. The details as required to be disclosed under SEBI Regulations are put on the Company's website at http://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 as amended a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annual Report which forms part of this Report.
Disclosures relating to the remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended 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 Act the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. The said information is available for inspection up to the date of the Meeting. Any member interested in obtaining the 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 any manufacturing activity most of the information as required under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 are not applicable. However the information as applicable has been given in Annexure - C forming part of this Report.
The Company has adopted `Reliance Group-Corporate Governance Policies and Code of Conduct' which sets out the systems processes and policies conforming to the international standards. The report on Corporate Governance as stipulated under Regulation 34(3) read with Para C of Schedule V of the Listing Regulations and Guidelines on Corporate Governance issued by the Reserve Bank of India is presented in separate section forming part of this Annual Report.
A Certificate from M/s. Aashish K. Bhatt & Associates Practicing Company Secretaries confirming compliance to the conditions of Corporate Governance as stipulated under Para E of Schedule V of the Listing Regulations is enclosed 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 the policy has been overseen by audit committee. No person has been denied for direct access to the Chairperson of the Audit Committee. The details of the same have been stated in the Report on Corporate Governance and the policy can be accessed on the Company's website.
The Company has laid down a Risk Management Policy defining Risk profiles involving Strategic Technological Operational Financial Organisational Legal and Regulatory risks within a well defined framework.The Risk Management Policy acts as an enabler of growth for the Company by helping its businesses to identify the inherent risks assess evaluate and monitor these risks continuously and undertake effective steps to manage these risks.
The Risk Management Committee consisting of Mr. Rahul Sarin as Chairman and Ms. Chhaya Virani as member periodically reviews the robustness of the Risk Management Policy. The periodical update on the risk management practices and mitigation plan of the Company and subsidiaries are presented to the Audit Committee and Board of Directors. The Audit Committee and Board periodically review such updates and findings and suggest areas where internal controls and risk management practices can be improved. More details on Risk Management indicating development and implementation of Risk Management Policy including identification of elements of risk and their mitigation are covered in Management Discussion and Analysis section which forms part of this Report.
Compliance with provisions of Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013
The Company is committed to uphold and maintain the dignity of woman employees and it has in place a policy which provides for protection against sexual harassment of women at work place and for prevention and redressal of such complaints. During the year no such complaints were received. The Company has also constituted an Internal Complaints Committee under the Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013.
Corporate Social Responsibility
The Company has constituted Corporate Social Responsibility (CSR) Committee in compliance with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014. The CSR Committee has formulated a Corporate Social Responsibility Policy (CSR policy) indicating the activities to be undertaken by the Company. The CSR policy may be accessed on the Company's website at the link; http://www.reliancecapital.co.in/pdf/Group_CSR_ Policy_Document.pdf.
As on March 31 2020 the CSR Committee consists of Ms. Chhaya Virani as Chairperson Mr. Rahul Sarin and Dr. Thomas Mathew as the Members. The disclosures with respect to CSR activities are given in Annexure - D.
Significant and material Orders passed by the Regulators or Courts or Tribunal
1. Pursuant to Order dated November 20 2019 passed by the Hon'ble Delhi High Court in the matter of OMP(I) COMM. 419/2019 and OMP(I) COMM. 420/2019 the Company is prohibited to dispose off alienate encumber either directly or indirectly or otherwise part with the possession of any assets.
2. The Company is also prohibited from transferring alienating encumbering or otherwise parting with the possession of assets owned by the Company pursuant to the proceedings initiated by Vistra ITCL (India) Limited the Debts Recovery Tribunal vide its order dated December 3 2019.
Internal Financial Control Systems and their adequacy
The Company has in place adequate internal financial control systems across the organization. The same is subject to review periodically by the internal audit cell for its effectiveness. During the year such controls were tested and no reportable material weakness in the design or operation was observed. As regards the qualified opinion of auditors on the Internal Financial Control it is stated that the Company is taking constant steps to strengthen its loan sanctioning processing and documentation processes.
Your Directors would like to express their sincere appreciation for the co-operation and assistance received from shareholders debenture holders debenture trustee bankers financial institutions regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives officers and staff.
|For and on behalf of the Board of Directors|
|Anil Dhirubhai Ambani|
|May 8 2020|