Reliance Capital Limited
profile
Reliance Capital Limited is a part of the Reliance - Anil Dhirubhai Ambani Group. Reliance Capital, incorporated in 1986, is one of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net wor th. Reliance Capital has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services.
Exc ll ce financial se rv ce M ission: Ex c e l l e n c e in f inancial s e r v i c e s
To attain global best practices and become a world-class financial services enterprise – guided by its purpose to move towards greater degree of sophistication and maturity. To work with vigour, dedication and innovation to achieve excellence in service, quality, reliability, safety and customer care as the ultimate goal. To earn the trust and confidence of all stakeholders, exceeding their expectations and make the Company a respected household name. To consistently achieve high growth with the highest levels of productivity. To be a technology driven, efficient and financially sound organisation. To contribute towards community development and nation building. To be a responsible corporate citizen nurturing human values and concern for society, the environment and above all, people. To promote a work culture that fosters individual growth, team spirit and creativity to overcome challenges and attain goals. To encourage ideas, talent and value systems. To uphold the guiding principles of trust, integrity and transparency in all aspects of interactions and dealings.
This report is printed on paper manufactured with more than 75 per cent recycled fibre.
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Reliance Capital Limited
LETTER SHAREO LETTER T O SHARE O W NERS
"Think big, think fast, think ahead. Ideas are no one's monopoly."
- Dhirubhai H. Ambani
dear fel ell Shareowners, eowner My dear fellow Shareowners, It gives me great pleasure to share with you the highlights of our Company's performance during the year 2006-07. I am delighted to share with you that in a span of less than 2 years from the date of the reorganization of the Reliance group in June 2005, our company has become one of the 20 most valuable private sector companies in India, with a market capitalization in excess of Rs. 25,000 crore and a shareholder base of over 1.3 million investors. Our Company now ranks among the top 3 private sector banking and finance companies on all major parameters, with interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking, distribution of financial products, and other financial services. We have over 5 million customers, served by 2,700 outlets in over 625 cities and towns, representing one of the largest distribution networks in the financial services space. Our company is an integral part of the Reliance ADA Group, India's third largest business house. Across different companies, the group enjoys the support of a customer base of over 100 million, and a shareholder base of over 7 million - the largest for any group in the country. This proud association defines our vision and values. It defines who we are, what we stand for and what we aspire to achieve. Reliance Capital, like the Reliance ADA Group, embodies the essential ethos of our young nation - the new resurgent India of the 21st century. Our goal is not just to build a great enterprise for our stakeholders but a great future for our country - to give millions of young Indians the means to fulfill their dreams, the power to shape their own destiny and to realize their true and diverse potential. We are not just about scale and size; we are about the pursuit of excellence, the integrity of our values and the quality of our services. Per formance Re view erformance Review You will be happy to learn that during the year, our Company achieved substantial improvement in its financial and operational performance. The salient points are: onsolidat ate Income cror ore Consolidated To tal Income of Rs. 2,158 crore (US$ 495.0 million), against Rs. 947 crore in the corresponding period last year, an increase of 128% increase onsolidat ate Profit cror ore increase Consolidated Net Profit of Rs. 703 crore (US$ 161.3 million), against Rs. 572 crore during the previous year, an increase of 23% Income cror ore increase To tal Income of Rs. 884 crore (US$ 202.08 million), against Rs. 652 crore last year, an increase of 36% Profit cror ore increase Net Profit of Rs. 646 crore (US$ 148.2 million), against Rs. 538 crore during the previous year, an increase of 20% Consolidated Earning per share (EPS) of Rs. 30.89 (US$ 0.71), against Rs. 26.19 in the corresponding period last year, an onsolidat ate share increase of 18% Earning per share (EPS) of Rs. 28.39 (US$ 0.65), against Rs. 24.64 in the previous corresponding period, an increase of 15% sset ets compan stood ompany cror ore To tal A ssets of the company stood at Rs. 6,769 crore (US$ 1.51 billion) wor orth compan stood ompany cror ore billion) To tal Net wor th of the company stood at Rs. 5,161 crore (US$ 1.18 billion)
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Reliance Capital Limited
LETTER SHAREO (Cont ontd...) LETTER T O SHARE O W NERS (C ont d...) Reliance Capital has consistently enjoyed the highest levels of credit rating from the leading rating agencies in the country. Our short term borrowing programme has been assigned the A1+ and F1+ ratings by ICRA and Fitch respectively, indicating the lowest level of credit risk, and the strongest capacity for timely discharge of all financial obligations. Achievements during the year The year under review saw our Company reach new milestones in growth across various businesses. Reliance Mutual Fund emerged as India's no.1 mutual fund, with assets under management to the tune of Rs. 46,307 crore as on March 31, 2007 - a growth of nearly 87 per cent over the previous year. Over the same period, Reliance Life Insurance and Reliance General Insurance emerged as two of India's fastest growing insurance companies, with annual growth in excess of 349 and 422 per cent respectively, as against the industry average of 110 and 22 per cent respectively. In April 2007, we formally launched Reliance Money, a comprehensive online financial services and solutions portal, which provides our customers with investment and trading access to equities, equity options, commodities futures, mutual funds, IPOs, life and general insurance products, offshore investments and credit cards. The range of offerings, the ease of access and the sheer technological edge which Reliance Money brings is unparalleled in the history of the Indian financial and capital markets. The current year will herald the launch of our retail consumer finance business. utur gr ure driver ers Future grow th drivers Our future growth will be propelled by the quality of our human capital, the use of cutting-edge technology, and our extensive distribution reach. Technology, together with human and intellectual capital, will be the key differentiators for our Company going forward. We will use them as strategic tools to reduce the cost of delivery, improve the speed of execution and enhance customer experience at every point of interface. "Reliance" is amongst the most trusted brand names in India. We will leverage this brand equity to increase our market share and launch innovative products and services. We will strengthen and expand our already extensive distribution reach to further penetrate the Indian market and reach sections of people who have hitherto been denied the benefits of informed investment advice and world class financial services. Commitment Our Commitment Our founder, the legendary Dhirubhai H. Ambani, gave us a simple mantra: to aspire to the highest global standards of quality and efficiency, operational performance, and customer care. We remain committed to upholding that vision. Dhirubhai exhorted us to think big. We will think bigger. Indeed, not just bigger but better, creating ever greater value for all our stakeholders.
Anil D. Ambani Chairman May 28, 2007
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Reliance Capital Limited
BOARD OF DIRECTORS Shri Anil D. Ambani Shri Rajendra P. Chitale Shri C. P. Jain OMPANY SECRETAR C OMP ANY SECRET AR Y & MANA GER Shri V. R. Mohan AUDITORS M/s. Chaturvedi & Shah M/s. BSR & Co. BANKERS Allahabad Bank HDFC Bank Limited ICICI Bank Limited GISTERED RE GIS TERED OFFICE H Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairane, Navi Mumbai 400 710. Tel no. 022 3032 7000 Fax no. 022 3032 7202 GISTRAR RE GIS TRAR & SHARE TRANSFER A GENT Karvy Computershar Private Ltd. omputershare rivat Karvy Computershare Private Ltd. Hyderabad : Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad 500 081. 91-040-2342 0815-25 91-040-2342 0859 Email: rclinvestor@karvy.com Website: www.karvy.com Andheri Office 7, Andheri Industrial Estate, off. Veera Desai Road, 843/311, Andheri (West), Mumbai - 400 053. 022-26730799/022-26730843 022-26730152 ort Office For t Off ice 16/22 Bake House, Ground floor, Near MSC Bank, Behind Rythm House Fort Mumbai - 400 023. 022-66382666/022-66381746 022-66331135/022-22040171 Punjab National Bank State Bank of Hyderabad Syndicate Bank Annexure to Auditors’ Report Balance Sheet Profit and Loss Account Schedules forming part of Balance Sheet and Profit and Loss Account Accounting Policies Notes to the Accounts Cashflow Statement Statement of Interest in Subsidiary Companies Auditors’ Report on Consolidated Financial Statements Details of Subsidiary Companies Consolidated Balance Sheet Consolidated Profit and Loss Account Schedules forming part of Consolidated Balance Sheet and Profit and Loss Account Accounting Policies on Consolidated Accounts Notes on Consolidated Accounts Consolidated Cash Flow Statement Shareholders’ response form - 2007 Attendance Slip & Proxy Form 36-37 38 39 - Chairman CONTENTS Financial Highlights Notice of Annual General Meeting Directors’ Report Management Discussion and Analysis Auditors’ Certificate on Corporate Governance Corporate Governance Investor Information Auditors’ Report age Page No.(s) 6 7 8-10 11-15 16 17-24 25-34 35
Shri Amitabh Jhunjhunwala - Vice Chairman
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Mumbai
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General Meeting uesda uly 21st Annual General Meeting on Tuesday, July 3, 2007 at 11:00 a.m., Birla Mat atushri Sabhagar ar, ithaldas Thacker ers Marg Mumbai arg, at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020.
Repor can eport accesse www.reliancecapital.c .reliancecapital.co.in This Annual Report can be accessed at www.reliancecapital.co.in
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FINANCIAL HIGHLIGHTS (Rs. in crore) FINANCIAL HIGHLIGHTS Ended Mar arch Year Ended March 31 Turnover Earnings Before Depreciation, Interest and Tax(EBDIT) Depreciation Profit After Tax Equity Dividend% Dividend Payout Equity Share Capital Reserves and Surplus Net Worth Total Assets Market Capitalisation Number of Employees 2007 883.86 782.88 2006 652.02 619.00 2005 295.69 290.06 2004 356.79 348.27 2003 458.78 447.09 2002 548.59 529.83 2001 492.20 475.06 2000 457.40 450.87 1999 370.19 360.09 1998 301.33 284.93
7.07 646.18 35.00 100.58 246.16 4 915.07 5 161.23 6 573.19
23.19 537.61 32.00 81.32 223.40
27.77 105.81 30.00 38.19 127.84
42.09 105.79 29.00 36.92 127.97
91.65 102.63 29.00 36.92 127.83
55.18 101.22 29.00 36.92 127.83
71.97 93.45 29.00 36.96 127.83
84.94 90.56 28.00 35.70 126.93
98.87 90.46 28.00 34.75 123.98
79.81 106.45 28.00 34.75 123.97 989.11
3 849.58 1 310.08 1 271.84 1 208.50 1 147.99 1 901.91 1 071.03 1 011.80
4 122.46 1 437.92 1 399.81 1 336.33 1 275.82 2 039.74 1 197.96 1 135.78 1 113.08 4 364.35 2 809.94 2 751.47 3 106.78 3 710.70 4 356.51 3 513.40 2926.51 2 111.11 618.69 30 670.24 29 796.22 2 174.04 34 25 417.07 28 819.36 38
16 415.64 11 568.99 2 272.42 1 675.35 196 140 21 27
INDICA KEY INDICATORS Year Ended March 31 Ended Mar arch EBDIT / Gross Turnover% Net Profit Margin% Earnings Per Share (Rs.) Book Value Per Share (Rs.) Debt : Equity Ratio 2007 88.58 73.11 28.39 210.12 0.28:1 2006 94.94 82.45 24.64 184.97 0.06:1 2005 98.10 35.78 8.31 112.95 0.05:1 2004 97.61 29.65 8.31 109.96 0.42:1 2003 97.45 22.37 8.06 104.97 0.33:1 2002 96.58 18.45 7.91 100.22 1.91:1 2001 96.52 18.99 7.33 160.24 1.81:1 2000 98.57 19.80 7.04 93.21 1.93:1 1999 97.27 24.44 7.04 88.37 1.58:1 1998 94.56 35.33 8.28 86.60 0.90:1
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Reliance Capital Limited
NOTICE Notice is hereby given that the Twenty-First Annual General Meeting of the Members of Reliance Capital Limited will be held on Tuesday, July 3, 2007 at 11.00 A. M., at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020, to transact the following business: Ordinary Business: 1. To consider and adopt the audited Balance Sheet as at March 31, 2007, Profit and Loss Account for the year ended on that date and the Reports of the Board of Directors and Auditors thereon. 2. To declare dividend on equity shares. 3. To appoint a director in place of Shri Rajendra P. Chitale who retires by rotation and being eligible offers himself for re-appointment. 4. To appoint Auditors and to fix their remuneration and in this regard to consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution: NOTES 1. A member entitled to attend and vote at the Annual General Meeting (the Meeting) is entitled to appoint a proxy to attend and vote on a poll, instead of himself pro need not Compan ompany and the prox y need no t be a member of the Company. how er, pro The instrument appointing prox y should, however, be Compan not ompany Registere Office egister deposite deposite d at the Registered Office of the Company no t for ort hours befor ore commenc ommencement less than for ty eight hours before the commencement meeting. of the meeting. 2. Corporate Members are requested to send a duly certified copy of the Board Resolution authorising their representatives to attend and vote at the Annual General Meeting. 3. Members/Proxies should fill the Attendance Slip for attending the meeting. 4. In case of joint holders attending the meeting, only such joint holder who is higher in the order of names will be entitled to vote. 5. Members who hold shares in electronic form are requested to write their Client ID and DP ID numbers and those who hold shares in physical form are requested to write their Folio Number in the attendance slip for attending the meeting to facilitate identification of membership at the meeting. Members are requested to bring their attendance slip along with their copy of the annual report to the meeting. 6. All documents referred to in the accompanying Notice are open for inspection at the Registered Office of the Company on all working days, except Saturday between 11.00 a.m. and 1.00 p.m. upto the date of the Annual General Meeting. 7. (a) The Company has already notified closure of Register of Members and Transfer Books thereof from Friday, June 1, 2007 to Friday, June 15, 2007 (both days inclusive) for determining the names of members eligible for dividend, if approved, on equity shares for the year ended March 31, 2007. In respect of shares held in electronic form, the dividend will be paid on the basis of particulars of beneficial ownership furnished by the Depositories for this purpose. (b) The dividend on equity shares, as recommended by the Board of Directors, if declared at the Annual General Meeting, will be paid on or after the Annual General Meeting (AGM) i.e. July 3, 2007. (c) Members may please note that the Dividend Warrants shall be payable at par at the designated branches of the Bank printed on the reverse of the Dividend Warrant for an initial period of three months only. Thereafter, the Dividend Warrant on revalidation shall be payable only at limited centres / branches of the said Bank. The members are therefore, advised to encash Dividend Warrants within the initial validity period. 8. Non-resident Indian members are requested to inform Karvy Computershare Private Limited immediately on: a. the change in the residential status on return to India for permanent settlement. b. the particulars of the bank accounts maintained in India with complete name, branch, account type, account number and address of the bank, if not furnished earlier. 9. Re-appointment of Director: At the ensuing Annual General Meeting, Shri Rajendra P. Chitale, Director of the Company retires by rotation and being eligible offers himself for re-appointment. The details pertaining to the Director required to be provided pursuant to clause 49 of the listing agreement is furnished in the Statement on corporate governance published elsewhere in the annual report. "RESOLVED THAT M/s. Chatur vedi & Shah, Char tered Accountants, and M/s. BSR & Co., Chartered Accountants, be and are hereby appointed as the Auditors of the Company, to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company, on such remuneration as may be fixed by the Board of Directors." By order of the Board of Directors Mohan V. R. Mohan ompany Secretary etar Manag anager Company Secretary & Manager
Registered Office : H Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairane, Navi Mumbai 400 710. April 23, 2007
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Reliance Capital Limited
DIRECTORS’ REPORT Dear Shareowners, Your Directors have pleasure in presenting the 21st Annual Report and the audited accounts of the Company for the year ended March 31, 2007. Financial Results: The performance of the Company for the financial year ended March 31, 2007 is summarized below:
Ended Year Ended March 31, 2007 (Rs. in crore) Gross Income Gross Profit Less: Depreciation Profit before Tax Provision for Taxation Net Profit Add: Profit brought forward from the previous year Excess provision of Dividend Profit available for Appropriation Dividend including Dividend Tax Transfer to General Reserve Transfer to Statutory Reserve Fund Balance carried forward 883.86 740.25 7.07 733.18 87.00 646.18 499.69 21.93 1 167.80 100.58 64.62 129.24 873.36
Ended Year Ended March 31, 2007 (US$ In millions) 202.77 169.83 1.62 168.21 19.96 148.25 114.63 5.03 267.91 23.07 14.82 29.65 200.36
Year Ended March 31, 2006 (Rs. in crore) 652.02 573.79 23.19 550.60 13.00 537.61 204.70 742.31 81.32 53.77 107.53 499.69
Year Ended March 31, 2006 (US$ In millions) 146.16 128.63 5.20 123.43 2.91 120.51 45.89 166.40 18.23 12.05 24.10 112.01
The Company's gross income for the financial year ended March 31, 2007 increased to Rs. 883.86 crore, from Rs. 652.02 crore in the previous year, registering a growth of over 35.56 per cent. The operating profit (PBDIT) of the Company increased 26.48 per cent to Rs. 782.88 crore during the year from Rs. 619 crore in the previous year. Interest expenses for the year declined 5.69 per cent to Rs. 42.63 crore, from Rs. 45.20 crore, in the previous year. Depreciation was at Rs. 7.07 crore as against Rs. 23.19 crore in the previous year. Provision for taxation during the year was Rs. 87 crore. Net profit for the year increased by over 20 per cent to Rs. 646.18 crore from Rs. 537.60 crore in the previous year. An amount of Rs. 129.24 crore was transferred to Statutory Reserve Fund pursuant to section 45-IC of the Reserve Bank of India Act, 1934, and an amount of Rs. 64.62 crore was transferred to the General Reserve during the year under review. The Company's Net worth as on March 31, 2007, stood at Rs. 5,161.23 crore, as against Rs. 4,122.46 crore last year. Dividend: Your Directors have recommended a dividend of Rs. 3.50
(35 per cent) per equity share on 24,56,32,800 equity shares of Rs. 10 each, for the financial year ended March 31, 2007, which, if approved at the ensuing Annual General Meeting, will be paid to (i) all those members whose names appear in the Register of Members of the company after giving effect to all valid share transfers in physical form lodged with the company before June 1, 2007 and (ii) to those members whose names appear as beneficial owners, are furnished by the depositories viz. National Securities Depository Limited and Central Depository Services (India) Limited for the purpose. anagement Analy Financial Condition: Management Discussion and Analysis of Financial Condition: Management Discussion and Analysis of financial condition and results of operations of the Company for the year under review, as required under clause 49 of the listing agreement with the Stock Exchanges, is given as a separate statement forming part of the annual report. Scheme of Amalgamation and Arrangement: During the year, in terms of the Scheme of Amalgamation and Arrangement between the Company, Reliance Capital Ventures Limited (RCVL) and their respective shareholders and creditors, as approved by the Hon'ble High Court of Gujarat at Ahmedabad and the Hon'ble High Court of Judicature at Bombay vide their respective orders dated June 23, 2006 and June 22, 2006, RCVL stood amalgamated with the Company with effect from July 17, 2006. In terms of the Scheme, the Company issued
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Reliance Capital Limited
ORS’ REPORT ontd DIREC T ORS ’ REPOR T - ( C ont d ...) and allotted 5 (five) equity shares of the face value of Rs. 10 each, for every 100 (one hundred) equity shares of the face value of Rs. 10 each held in RCVL, and the entire shareholding of the Company held by RCVL stood cancelled, thus resulting in a net increase of 10,66,555 equity shares of Rs. 10 each in the paid up capital of the Company. Issue of Shares against warrants: During the year 2,17,00,000 equity shares of Rs. 10 each of the Company were allotted to the promoter group upon exercise of outstanding warrants held by them. The said shares were issued at the stipulated price of Rs. 228 per equity share, aggregating to Rs. 494.76 crore. Off akeo eov Regulations: egul Open Offer under SEBI Takeover Regulations: On April 18, 2007, the Company announced an open offer to the Shareholders of TV Today Network Limited to comply with the procedural requirement of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The open offer shall be for acquisition of the mandatory 20% share capital of TV Today Network Limited from the existing shareholders, at a price of Rs. 130.50 per share, amounting to approximately Rs. 151.38 crore. The said open offer is intended to facilitate increasing the Company's existing shareholding of approximately 12% to beyond the stipulated threshold of 15% and will not result in any change in the management and/or control of TV Today Network Limited. Subsidiaries: During the year, Reliance Venture Asset Management Private Limited, Travelmate Services (India) Private Limited, Medybiz Private Limited, Net Logistics Private Limited, Reliance Capital Research Private Limited and Reliance Technology Ventures Private Limited have become subsidiaries of the Company. In terms of the approvals granted by the Central Government under section 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsisting subsidiaries have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any member of the Company interested in obtaining the same. However, as directed by the Central Government, the financial data of the subsidiaries have been furnished under 'Details of Subsidiaries', forming par t of the Annual Repor t. Fur ther, pursuant to Accounting Standard (AS-21) issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company in this Annual Report includes financial information of its subsidiaries. Fixed Deposits: The Company has neither accepted nor renewed any fixed deposits during the year. The deposits remaining unclaimed on the due dates as on March 31, 2007, were 39 deposit accounts aggregating to Rs. 0.04 crore. RCL has intimated the deposit holders individually of their unclaimed amount with a request to return the Fixed Deposit Receipts duly discharged to enable the Company to repay the amount. Directors: In terms of Article 154 of the Articles of Association of the Company, Shri Rajendra P. Chitale, Director of the Company, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. Shri Udayan Bose ceased to be a Director with effect from December 23, 2006. Your directors place on record their deep sense of appreciation for the invaluable contribution made by Shri Udayan Bose during his tenure as Director of the Company. A brief resume of the Director retiring by rotation and seeking re-appointment at the ensuing Annual General Meeting, nature of his expertise in specific functional areas, and names of companies in which he holds directorship and/or membership/ chairmanship of committees of the board, his shareholdings, etc. as stipulated under clause 49 of the listing agreement with the Stock Exchanges, are given in the section on Corporate Governance elsewhere in the Annual Report. Directors' Responsibility Statement: Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that: (i) in the preparation of the accounts for the financial year ended March 31, 2007, the applicable accounting standards have been followed and that there are no material departures; (ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2007, and of the profit of the Company for the year ended on that date; (iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) the Directors have prepared the annual accounts of the company on a 'going concern' basis. onsolidat ate Financial Statements: atement Consolidated Financial Statements: In accordance with Accounting Standard (AS-21) on Consolidated Financial Statements read with Accounting Standard (AS-23) on Accounting for Investments in Associates, your Directors provide the audited Consolidated Financial Statements in the Annual Report. These statements have been prepared on the basis of financial statements received from subsidiary and associate companies, as approved by their respective Boards. Auditors & Auditor's Report: M/s. Chatur vedi & Shah, Char tered Accountant s, and M/s. BSR & Co., Chartered Accountants, as Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received letters from M/s. Chaturvedi & Shah, Char tered Accountants and M/s. BSR & Co., Char tered
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Reliance Capital Limited
ORS’ REPORT ontd DIREC T ORS’ REPOR T - ( Cont d ...) Accountants, to the effect that their appointment, if made, would be within the prescribed limits under section 224(1B) of the Companies Act, 1956, and that they are not disqualified for such appointment within the meaning of section 226 of the Companies Act, 1956. articulars ticular Emplo Par ticulars of Employees: In terms of the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of the employees are required to be set out in the Annexure to the Directors' Report. However, as per the provisions of section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company at its Registered Office. Conserv onser echnolo Absorp sorption For oreign Energy Conser vation, Technolo gy Absorp tion and Foreign Exchange Earnings and Outgo: Particulars required to be furnished under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are as under:(1) Part A and B pertaining to conservation of energy and technology absorption are not applicable to the Company. (2) Foreign Exchange earnings and outgo: Earnings - Nil Outgo - Rs. 4.25 crore ansfer Unclaime aimed to Transfer of Unclaimed Dividend to IEPF: Pursuant to the provisions of section 205A of the Companies Act, 1956, the dividend declared which remained unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to section 205C of the said Act. orporat Governance: ate Corporate Governance: The report on Corporate Governance as stipulated under clause 49 of the listing agreement with the Stock Exchanges, forms part of the Annual Report. A Certificate from the Auditors of the Company M/s. Chaturvedi & Shah and BSR & Co., Chartered Accountants, confirming compliance with conditions of Corporate Governance as stipulated under the aforesaid clause 49, is annexed to this Report. Acknowledgements: Your Directors would like to express their sincere appreciation of the co-operation and assistance received from shareholders, bankers, 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, resulting in the successful performance during the year. For and on behalf of the Board of Directors behalf Board Direc ors ect
Anil D. Ambani Chairman Mumbai April 23, 2007
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Reliance Capital Limited
MANAGEMENT ANALYSIS MANA GEMENT DISCUS SI ON AND ANALYSIS
The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, and Generally Accepted Accounting Principles (GAAP) in India. However, readers are cautioned that this discussion may contain "forward-looking statements" by Reliance Capital Limited ("RCL") that are not historical in nature. These forward looking statements, which may include statements relating to future results of operations, financial condition, business prospects, plans and objectives, are based on the current beliefs, assumptions, expectations, estimates, and projections of the directors and management of RCL about the business, industry and markets in which the company operates. These statements are not guarantees of future performance, and are subject to known and unknown risks, uncertainties, and other factors, many of which beyond RCL's control and difficult to predict, that could cause actual results, performance or achievements to differ materially from those in the forward looking statements. Such statements are not, and should not be construed, as a representation as to future performance or achievements of RCL. In particular, such statements should not be regarded as a projection of future performance of RCL. It should be noted that the actual performance or achievements of RCL may vary significantly from such statements.
Macroeconomic Overview: A structural shift has taken place in the Indian economy, which will propel real GDP growth from the 6 per cent averaged over the previous two decades, to nearly 8 per cent in the coming years. Indeed, recent economic performance supports this view. GDP has increased on an average by about 8.5 per cent annually over the last four years. This economic expansion was marked by three related trends. First, productivity gains in both industry and services have allowed the country to increase its participation in international trade and investment. For example, goods and services exports (in nominal US$ terms) have grown at an average of 30 per cent annually since 2003. Average net foreign investment inflows have increased from less than US$ 5 billion annually between the mid to late nineties to about US$ 15 billion annually between 2003 and 2006. Second, technology and human resources now flow easily across India's borders in both directions, further facilitating efficiency. Third, increased financial intermediation has helped accelerate the pace of domestic investment. It has also provided additional channels for savings so that households may reap the benefits of corporate profitability via financial market participation. Fixed investment has risen from 24 per cent of GDP in FY 2001 to 33.8 per cent of GDP in FY 2006, while savings have gone up from 23.4 per cent of GDP to 32.4 per cent of GDP during the same period.
Gro Builds Pr 2006 Growth Builds on Previous Trends: Global growth in 2006-07 was estimated at about 5.4 per cent and India was among the world's fastest growing economies, with a growth rate of 9.2 per cent. This performance was supported by strong growth numbers both in manufacturing the index of industrial production grew at 11 per cent between April 2006 and February 2007 and the services sector, which registered a rise of 10.9 per cent between April and December 2006. oreign Capit Inflo apital support Balanc ance Payments Position: Foreign Capital Inflows support Balance of Payments Position: India's external trade account reflected a robust economic momentum in 2006-07. A strong increase in domestic demand led to a 28 per cent increase in merchandise imports over the first eleven months of 2006-07, while merchandise exports grew 19 per cent over the same period. The consequent widening of the trade deficit was more than offset by non-resident remittances along with foreign debt and investment inflows. Hence, 2006-07 continued the trend of substantial balance of payments surpluses. India's foreign exchange reserves increased by about US$ 48 billion over the previous year and crossed the US$ 200 billion mark in April 2007. The country's overall external debt position continues to be benign, as current foreign exchange reserves far exceed the total official and private sector external debt. Inflation and Monetary Policy: The RBI had forecast that WPI inflation would range between 5 and 5.5 per cent over 2006-07 and that forecast has proved true on an annual average basis. However, the year was characterized by a steadily rising inflation. Although it started the fiscal year at a little under 5 per cent, the WPI had risen above 5.5 per cent by November 2006, and between January and March 2007 it was pegged above 6 per cent. The runaway growth in bank credit was another cause of concern for the Central bank. The RBI, which has been tightening money supply since 2004, became even more forceful in its approach: between December 2006 and March 2007, the repo rate was increased by 50 basis points from 7.25 per cent to 7.75 per cent and the CRR by 150 basis points from 5 per cent to 6.50 per cent. The impact of this monetary tightening was evident in the slowing of bank credit growth, which came down to about 27.5 per cent by end March 2007. RCL with its growing presence in Asset management, General and Life insurance, Broking and distribution businesses, all within the financial services space, is well positioned to tap the expected across-the-board growth in various financial products and services. The launch of retail finance business in the current financial year will be another step in RCL's journey to become a leading player in the financial services space in India.
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Reliance Capital Limited
MANAGEMENT SION ANALYSIS (Contd MANA GEMENT DISCUS SI ON AND ANALYSIS - ( Cont d ...) onsolidat ated financial performance: Consolidated financial per formance: RCL's consolidated operating and other income for the financial year ended March 31, 2007 increased to Rs. 2,157.86 crore(US$ 495.03 Million), from Rs. 947.05 crore in the previous year, registering a growth of 128 per cent. Staff costs for the year were Rs. 147.22 crore (US$ 33.77 Million) as against Rs. 44.57 crore in the previous year, an increase of 230 per cent. This was largely due to a planned ramp up in the number of employees across various businesses. Administrative and other expenses excluding premium paid on reinsurance, and reserve for unexpired risk were Rs. 470.99 crore (US$ 108.05 Million) as against Rs. 104.29 crore, an increase of 352 per cent. The increase was mainly on account of expanding distribution network and higher spending on marketing and selling. Interest and finance charges for the year were Rs. 42.70 crore (US$ 9.80 Million) as against Rs. 45.20 crore in the previous year. Depreciation for the year was Rs. 13.96 crore as against Rs. 25.55 crore in the previous year. Profit before tax increased to Rs. 811.52 crore (US$ 186.17 Million) during the year as against Rs. 615.42 crore in the previous year, an increase of 32 per cent. Tax provision for the year was Rs. 112.02 crore (US$ 25.70 Million) as against Rs. 34.45 crore in the previous year, an increase of 225 per cent. Profit after tax, minority interest and share of profit of associates for the year was Rs. 703.21 crore (US$ 161.32 Million) as against Rs. 571.37 crore in the previous year, an increase of 23 per cent. Resources and Liquidity: As on March 31, 2007, the net worth of the company stood at Rs. 5,161 crore (US$ 1.18 Billion) as against Rs. 4,122 crore, an increase of 25 per cent. Consolidated net worth of the company stood at Rs. 5,302 crore (US$ 1.22 Billion) as against Rs. 4,211 crore, an increase of 26 per cent. During the year, the promoter group was allotted 2,17,00 000 equity shares upon conversion of outstanding warrants issued in 2005-05, and the paid up equity share capital increased to Rs. 246 crore (US$ 56.43 Million). As on March 31, 2007, the Company had a debt equity ratio of 0.28. The company has not raised any fixed deposits from the public. Credit Rating: RCL's short term borrowing program has been assigned a rating of "A1+" by ICRA Limited, the highest credit rating given by ICRA. Instruments carrying this rating are subject to, relatively, the least degree of credit risk. Fitch Rating India Private Limited assigned the borrowing program a rating of "F1+", which stands for the highest credit quality and indicates the strongest capacity for timely discharge of financial obligations. Finance & Investments: RCL's (standalone) investment portfolio as on March 31, 2007 was Rs. 2,434 crore (US$ 558.38 Million), at cost. RCL's strategy for its proprietary investment and private equity is to focus on asset quality and asset mix to achieve superior returns. The company has increasingly diversified its scope of operations into a variety of avenues as afforded under the Indian NBFC regulatory framework, through its interests in asset management and mutual funds, life and general insurance, stock broking and other activities in financial services. Reliance Capital Asset Management eliance Mut utual Fund: Reliance Mutual Fund: With growing awareness of mutual funds as an investment option, the AUM of the Indian mutual industry has grown over four fold over the past three years. Despite the strong growth, India continues to be one of the most under penetrated markets in the world, with AUM of less than 9 per cent of GDP. The Mutual funds AUM as a percentage of GDP in case of developed markets like the US is around 70 per cent, and around 40 per cent in developing markets like Brazil. At the end of March 2007, there were 32 mutual fund players in India. The industry is highly fragmented, with the top 5 players commanding 52 per cent of the market share. During the year 2006-07, Reliance Mutual Fund (RMF) emerged as the no.1 mutual fund in the country. The AUM as on March 31, 2007, increased to Rs. 46,307 crore (US$ 10.62 Billion) from Rs. 24,670 crore as on March 31, 2006, an increase of 87.7 per cent. During the same period, the AUM of the entire Indian mutual fund industry increased from Rs. 2,31,862 crore to Rs. 3,59,097 crore (US$ 82.38 Billion), a growth of 55 per cent. (Source: AMFI website). The number of investors in RMF increased to 32.27 lakh by March 31, 2007, as against 20.95 lakh investors on March 31, 2006, an increase of 54 per cent. During 2006-07, 6 new schemes were launched and by March 31, 2007 there were a total of 28 schemes, of which 13 were equity-oriented while 15 others were debt-oriented schemes. The number of branches as on March 31, 2007, increased to 123, from 81 as on March 31, 2006. In November 2006, Reliance Growth and Reliance Vision, two equity funds managed by RMF, were ranked as the top two funds globally, based on their five year
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Reliance Capital Limited
MANAGEMENT SION ANALYSIS (Contd MANA GEMENT DISCUS SI ON AND ANALYSIS - ( C ont d ...) performance track record. The ranking was as per data from the internationally acclaimed Lipper, which benchmarked the top 20 performers from a global universe of open-ended equity funds. The base date for the performance calculation was taken to be October 31, 2006, and the data was evaluated in terms of USD. In March 2007, RMF bagged six awards at the Lipper Fund Award Gulf 2007 for outstanding fund performance across various categories. The idea behind the awards was to honor consistent out-performance by individual funds and fund companies. The winning funds demonstrated a consistently strong track record of riskadjusted returns compared with peers. The performance was measured across bond, equity and mixed asset classes over a 1, 3, 5 and 10 year period. Reliance Asset Management (Singapore) Pte. Ltd.: During the year, Reliance Asset Management (Singapore) Pte. Ltd., a wholly owned subsidiary of Reliance Capital Ltd. (through Reliance Capital Asset Management Ltd.) received approval from the Securities and Exchange Board of India (SEBI) and the Monetary Authority of Singapore to commence operations. The first fund of this subsidiary, India Equity Growth Fund, commenced operations in February, 2007. As on March 31, 2007, the AUM of this fund was US$ 95 million. ortf tfolio Manag anagement Servic vices: Por tfolio Management Services: Reliance Portfolio Management Services is a premium financial service for select investors, from the portfolio management division of Reliance Capital Asset Management Ltd. This division creates customized portfolios for high net-worth individuals, keeping in mind their risk return preferences, and endeavors to generate superior returns. The AUM increased to Rs. 3,003.66 crore (US$ 689.07 Million) as on March 31, 2007, from Rs. 1,400.61 crore as on March 31, 2006, reflecting a growth of 114 per cent. The net profit of Reliance Capital Asset Management Ltd. was Rs. 49 crore (US$ 11.24 Million) for the period under review as against Rs. 30 crore in the previous year, an increase of 63 per cent. eliance Life Insuranc ance: Reliance Life Insurance: During the year ended March 31, 2007, the Indian life insurance industry collected new business premium of Rs. 75,406 crore (US$ 17.30 Billion) as against Rs. 35,898 crore in the previous year, an increase of 110 per cent. At the end of March 2007, there were 15 private sector players and one public sector company, Life Insurance Corporation of India (LIC). LIC enjoys 74 per cent market share, while the private sector players have 26 per cent market share. Within the private sector, the top 5 players command 75 per cent of the market share. Despite the high growth witnessed by the industry over the past few years, the growth potential remains strong, thanks to low penetration, attractive demographics, robust economic growth and increasing awareness. Through its investments in associate companies, Reliance Capital Ltd. is entitled to 100 per cent economic benefits arising from Reliance Life Insurance Co. Ltd. (RLIC). RLIC was the fastest growing Indian life insurance company amongst the private sector players, and moved up in industry rankings (in terms of monthly new business premium) from no. 11 in the previous year to no. 5 in 2006-07. Premium income for the year increased to Rs. 1,005 crore (US$ 230.56 Million) as against Rs. 224 crore in the previous year, a rise of 349 per cent. New business premium for the year was Rs. 932 crore (US$ 213.81 Million) as against Rs. 194 crore, an increase of 380 per cent. Of the total premium income, 88 per cent was from unit-linked plans and 12 per cent from others. The income during the year from single premium policies was 23 per cent as against 54 per cent in the previous year. The total number of policies in force as on March 31, 2007, was 5,15,680 as against 1,24,885, on March 31, 2006, an increase of 313 per cent. Reliance Life offers 32 products, of which 26 are aimed at individuals and 6 at groups. The distribution network was increased to 217 branches at the end of March 31, 2007, as against 153 branches at the end of March 31, 2006. RLIC has secured the approval of the Insurance Regulatory & Development Authority (IRDA) to start an additional 130 branches. The number of agents at the end of the year was 1,06,337, as against 20,231 agents at the end of previous year, an increase of 426 per cent. The policy holders' funds under management increased to Rs. 1,205 crore (US$ 276.44 Million) by March 31, 2007, as against Rs. 399 crore on March 31, 2006. Reliance Life Insurance will endeavor to attain a leadership position in the market over the next few years, by further expanding and strengthening its distribution network, and offering a diverse array of products to suit the varied and specific needs of individual customers. Reliance General Insurance: As on March 31, 2007, there were 8 private sector players and 4 public sector players in the general insurance sector in India. The public sector companies have 65 per cent market share, while the private sector players account for the balance 35 per cent.
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Reliance Capital Limited
MANAGEMENT SION ANALYSIS (Contd MANA GEMENT DISCUS SI ON AND ANALYSIS - ( Cont d ...) Post January 2007, tariffs have been partially deregulated. Insurance companies are now allowed to set their own prices (except "Third party motor insurance") subject to gradual increase / decrease in premiums from the tariff prices. With gross written premium of around 0.6 per cent of GDP, India is one of the most under-penetrated markets anywhere in the world, including emerging economies. In many developed nations, non-life insurance penetration is around 40-50 per cent of the life insurance market. For India, this figure stands at around 20 per cent. Reliance General Insurance (RGI) offers home, property, auto,travel, marine, commercial and other specialty insurance products. RGI was the fastest growing Indian general insurance company amongst the private sector players in 2006-07, and moved up in industry rankings (in terms of new business premium) from no. 8 in the previous year to no. 4 in March 2007. Gross Direct Premium for the year ended March 31, 2007, was Rs. 912 crore (US$ 209.22 Million) as against Rs.163 crore in the corresponding period the previous year, an increase of 462 per cent. The distribution network was increased to 85 branches by March 31, 2007, as against a mere 20 branches on March 31, 2006. The deregulation in this Industry in January 2007 which resulted in the detariffing of a majority of insurance products, has intensified competition among various players. With increasing investment in technology and further strengthening of the underwriting process, Reliance General Insurance is set to rank among the leading private sector players in India. Reliance Money: Reliance Money is a comprehensive financial services and solutions provider, providing customers with access to equities, equity and commodities derivatives, mutual funds, IPOs, life and general insurance products, offshore investments and credit cards. Reliance Money is targeting the low level of retail penetration in Indian retail financial market. Retail participation in equities in India is amongst the lowest in the world, with less than 5 per cent of household sector financial savings invested in equity/equity-related assets. The company has formally commenced operations in April 2007. Conc oncerns: Risks and Concerns: RCL is exposed to specific risks that are particular to its businesses and the environment within which it operates, including, inter alia, market risk, competition risk, interest rate volatility, human resource risk, execution risk and any significant downturn in the economic cycle. Cycle: Economic Cycle: The Indian economy has shown sustained growth over the last several years. Any slowdown in economic growth could adversely affect the Company's business. Market Risk: The Company has significant quoted investments which are exposed to fluctuations in stock prices. These investments represent a material portion of the Company's business and are vulnerable to fluctuations in the stock markets. Any decline in the prices of the Company's quoted investments may affect its financial position and the results of its operations. RCL has a well diversified portfolio of stocks to mitigate any stock specific risk. It also continuously monitors market exposure and uses derivative instruments as a hedging mechanism, wherever appropriate, to limit volatility in its asset returns. Risk: Competition Risk: The financial sector industry is becoming increasingly competitive and the Company's growth will depend on its ability to compete effectively. The Company's main competitors are Indian nonbanking financial companies, life and non-life insurance companies, both in the public and private sector, mutual funds, depository participants and other financial service providers. The Company's strong brand image, wide distribution network, diversified product offering and depth of management places it in a strong position to effectively mitigate this risk. Credit Risk: Credit risk is the risk of failure by the borrower to meet financial obligations to the lender. RCL has a standardized framework for evaluating loan proposals. The proposals are evaluated on various quantitative and qualitative parameters. The loan portfolios are continuously monitored, post disbursement, to proactively address credit related issues and initiate appropriate measures for recovery. Interest Rate Risk: The Company's earnings include, to a certain extent, interest income from its operations. The Company is exposed to interest rate risk, principally, as a result of lending to its customers at fixed interest rates and in amounts and for periods which may differ from those of its funding sources. There can be no assurance that significant interest rate movements will not have an adverse effect on its financial position. RCL's treasury team actively manages Asset Liability positions and interest rate exposure within the norms and guidelines set out by the management in the Asset Liability Management (ALM) framework. Human Resource Risk: The Company's success depends largely upon its management team and key personnel and its ability to attract and retain such persons. Any failure to attract and retain talented professionals may have an adverse impact on the Company's
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Reliance Capital Limited
MANAGEMENT SION ANALYSIS (Contd MANA GEMENT DISCUS SI ON AND ANALYSIS - ( C ont d ...) business, and its future financial performance. The Company has instituted a strong performance linked incentive plan wherein the employee's earnings are directly proportional to his/her contribution to business results. Operational Risk: The rapid development and establishment of financial services businesses in new markets may raise unanticipated operational or control risks, that may have an adverse effect on the Company's financial position and the results of its operations. An extensive system of internal controls is practised by RCL to ensure that all its assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly. The Audit Committee of Directors reviews the adequacy of internal controls. RCL manages all these risks by maintaining a conservative financial profile and by following prudent business and risk management practices. Human Resources: Across all business operations, Reliance Capital employed a total of 6,046 people as on March 31, 2007. The business wise break-up of employees is given below: Business Operation Asset Management General Insurance Life Insurance Reliance Money Reliance Capital TOTAL Number of employees 480 1 093 3 802 475 196 6 046 Opportunities: Low retail penetration of financial services/products in India Leveraging the Reliance brand and distribution network Cross selling of services Rising per-capita GDP Young population and attractive demographic profile Threats: Competition from local and multinational players Execution risk Regulatory changes Attraction and retention of Human Capital Outlook: The global economy is expected to grow at a slightly slower pace in 2007 than in 2006, led by a cooling of growth in the United States, but somewhat compensated by growth in Asia, including Japan. Europe too is expected to maintain growth levels only slightly below last year's. Having maintained an accelerated pace of over 9 per cent for the last two years, India's GDP growth is expected to moderate over 2007 but not significantly. The country is likely to become a US$ 1 trillion economy very shortly. Surveys indicate that domestic capital expenditure plans remain robust and should set the stage for future growth momentum. Similarly, infrastructure development should help unshackle the economy from supply constraints. The twin roles of funding this investment and distributing its benefits widely will be played by a growing and deepening Indian financial sector. In light of the above, the company, with its diversified portfolio of businesses having interests in asset management, life and general insurance, private equity and proprietary stock broking, expects to be a leading player in the financial services space in the coming years.
The workforce is young, with 87 per cent of the employees aged below 35 years. The employees are highly qualified with 62 per cent graduates and 35 per cent post-graduates.
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Reliance Capital Limited
ORS’ CERTIFIC CORPORA ORPORATE GOVERNANCE A UDI T ORS ’ CER TIFIC ATE ON C ORPORA TE GO VERNANCE To, The Members of Reliance Capital Limited We have examined the compliance of conditions of Corporate Governance by Reliance Capital Limited (‘the Company’), for the year ended on March 31, 2007 as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to a review of the procedures and implementations thereof adopted by the Company for ensuring compliance of conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the Clause 49 of the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768 Mumbai Dated: April 23, 2007
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Reliance Capital Limited
ORPORATE GOVERNANCE C ORPORA TE GO VERNANCE Reliance Capital has established a tradition of the highest standards of corporate governance principles and best practices. Reliance Capital is committed to introducing corporate governance practices in tandem with domestic and international developments to position itself to conform to the best governance practices. The company takes feedback into account in its periodic reviews of the guidelines to ensure their continuing relevance, effectiveness and responsiveness to the needs of local and international investors and all other stakeholders. Our governance philosophy The Company's philosophy on Corporate Governance envisages the attainment of the highest levels of transparenc y, accountability and equity, in all facets of its operations, and in all its interactions with its stakeholders, including shareholders, employees, the government, lenders and the society. The Company believes that all its operations and actions must serve the underlying goal of enhancing overall shareholder value, over a sustained period of time. In our commitment to practice sound governance principles, we are guided by the following core principles: ansparenc ency Transparenc y To maintain the highest standards of transparency in all aspects of our interactions and dealings. Disclosures To ensure timely dissemination of all price sensitive information and matters of interest to our stakeholders. Accountability To demonstrate highest levels of personal responsibility and continually affirm that employees are responsible to themselves for the pursuit of excellence. ompliances Compliances To comply with all the laws and regulations as applicable to the company. Ethical conduct To conduct the affairs of the company in an ethical manner. Stakeholders' interests To promote the interests of all stakeholders including customers, shareholders, employees, lenders, vendors and the community. Governance practices beyond regulatory requirements Our governance practices go beyond the statutory and regulatory requirements. Our endeavour is to follow the spirit of good governance than mere compliance with the conditions specified by regulatory authorities. With this objective, we have formulated, inter alia, the following policy documents and introduced best practices of governance : alues commitment ommitments A. Values and commitments We have set out and adopted policy documents on 'values and commitments' of Reliance Capital. We believe that any business conduct can be ethical only when it rests on the nine core values of honesty, integrity, respect, fairness, purposefulness, trust, responsibility, citizenship and caring. B. Code of ethics Our policy document on 'code of ethics', in essence, directs that our employees should conduct the business with integrity by excluding consideration of personal advantage. C. Business policies Our 'business policies' contains the policy on fair market practices, inside information, financial records and accounting integrity, external communication, work ethics, personal conduct, policy on prevention of sexual harassment, health, safety & environment and quality. Separation Board's supervisor rol fr visory ole D. Separation of the Board's super visor y rol e fr om the executive management In line with the best global practices, we have adopted the policy of separating the Board's supervisory role from the executive management and splitting the posts of chairman and CEO. E. Prohibition of insider trading policy This document contains the policy on prohibiting trading in the equity shares of the Company, based on inside or privileged information. F. Prevention of sexual harassment Our policy on prevention of sexual harassment aims at promoting a productive work environment and protects individual rights against sexual harassment.
G . Whistle blower policy Our whistle blower policy encourages disclosure in good faith of any wrongful conduct on a matter of general concern and protects the whistle blower from any adverse personnel action. H. Risk management Our risk management procedures ensure that the management controls risks through means of a properly defined frame work. I. Boardroom practices i. Board charter The board of directors have adopted a comprehensive board charter. The charter has set out matters relating to board composition, scope and functions of the board and its committees, etc.
enure direc ors ect ii. Tenure of independent directors Tenure of independent directors on the board of the company shall not extend beyond nine years, subject to their re-appointment on retirement by rotation as per statutory provisions. iii. Independent director's interaction with shareholders Shri Rajendra P. Chitale, an independent director, interacts with shareholders on their suggestions and queries which are forwarded to the company secretary. iv. iv. Meeting of independent directors with operating team The independent directors of the company meet in executive sessions with the operating teams in each of the respective areas, on a regular basis as they deem necessary. These executive session discussions may include
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Reliance Capital Limited
ORPORATE GOVERNANCE (Cont ontd...) C ORPORATE GO VERNANCE (C ont d...) topics such as, operating policies and procedures; risk management strategies; measures to improve efficiencies; performance and compensation; strategic issues for board consideration; flow of information to directors; management progression and succession and others as the independent directors may determine. During these executive sessions, the independent directors have access to members of management and other advisors, as the independent directors may determine and deem fit. v. direc ors ect Commitment of directors The board meeting dates for the entire financial year are scheduled in the beginning of the year and an annual calendar of meetings of the board and its committees is circulated to the directors. This enables the directors to plan their commitments and facilitates attendance of all directors at the meetings of the board and its committees. Such advance planning of meetings enable the directors to plan their commitments, particularly in the context that the meetings of the board normally extends over the entire working day. Shareholder eholders ii. Shareholders : The significant services and facilities being rendered to investors include e-payment of dividend at over 160 cities, odd lot share scheme for convenient disposal of odd lot shares held in physical form and annual shareholder satisfaction survey. society: iii. The society: The company, in keeping with its corporate social responsibility (CSR) policy, focuses on healthcare, education, and other social initiatives. ompliance code rules LSE Compliance with the code and rules of LSE The Global Depository Receipts (GDRs) issued by the company are listed on the Luxembourg Stock Exchange (LSE). The company has reviewed the code on corporate governance of LSE, though the same is not applicable to the company. The company's corporate governance practices substantially conform to these codes and rules. ompliance claus ause agr Compliance with clause 49 of the listing agreement Reliance Capital is fully compliant with the mandatory requirements of clause 49 of the listing agreement formulated by Securities and Exchange Board of India (SEBI). We present our report on compliance of governance conditions specified in clause 49. I. Board of directors 1. Board composition - Board strength and representation As at March 31, 2007, the board consisted of four members. The composition of and the category of directors on the board of the company were as under: Category Non-executive non-independent directors Independent directors articulars ticular direc ors ect Particulars of directors Shri Anil D. Ambani, Chairman Shri Amitabh Jhunjhunwala, Vice Chairman Shri Rajendra P. Chitale Shri C. P. Jain
J.
Governance practices actic fol oll to promo omot Governance prac tices being foll o we d to promo te the interests of our stakeholders We have in the recent past introduced several trend setting governance practices to improve stakeholder satisfaction, some of the major ones being Employees : We have a dedicated employee service portal which offers various online services and facilities on Human Resources (HR) and employee welfare like details of current and past salaries, income-tax computations, attendance and leave management, goal setting with relevant Key Risk Indicators (KRIs) and Key Performance Indicators (KPIs), potential assessment module, performance evaluation system, feedback mechanism, reward and recognition policy, grievance redressal system, exit interviews, training and development module, etc., all of which collectively lead to enhanced employee engagement. We conduct the employee engagement survey through an external organization. The results are communicated to all the employees and appropriate actions are initiated to enhance employee satisfaction based on their feedback. As a means of providing accelerated career growth to high performing talent, we have a pilot program of assessment centers, wherein employees who have demonstrated performance are put through a rigorous assessment program for higher role. We have institutionalized a leadership development process, linked to Reliance DNA & leadership competencies, which identify high potential talent on a periodic basis and provide necessary learning interventions to upskill them to take on larger responsibilities and roles.
i.
onduct board proceeding oceedings 2. Conduct of board proceedings The day to day business is conducted by the officers and the managers of Reliance Capital under the direction of the board led by the Chairman. The board holds five to six meetings every year to review and discuss the performance of the company, its future plans, strategies and other pertinent issues relating to the company. The board performs the following specific functions in addition to the oversight of the business and the management: review, monitor and approve major financial and business strategies and corporate actions. assess critical risks facing the company - review options for their mitigation. provide counsel on the selection, evaluation, development and compensation of senior management. ensure that processes are in place for maintaining the integrity of the company the financial statements compliance with law relationships with all the stakeholders
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Reliance Capital Limited
ORPORATE GOVERNANCE (Cont ontd...) C ORPORATE GO VERNANCE (C ont d...) delegation of appropriate authority to the senior executives of the company for effective management of operations. 3. Board meetings The board held five meetings during 2006-07 on April 24, 2006, June 9, 2006, July 18, 2006, October 26, 2006 and January 30, 2007. The maximum time gap between any two meetings was 100 days and the minimum gap was 35 days. The board periodically reviews compliance reports of all laws applicable to the Company and takes steps to rectify non-compliances, if any. Standards issued by ICSI: The company is in compliance with the secretarial standards governing board meetings as also general meetings as set out in Secretarial Standards 1 and 2 issued by the Institute of Company Secretaries of India. The board of directors of the company has taken necessary steps in order to ensure compliance with these standards. Besides, the board has constituted several committees to deal with various specialised issues. 4. Attendance of directors The overall attendance of directors was 83 per cent. It is proposed to introduce tele-conferencing and video-conferencing facilities immediately upon amendment to the relevant statutes. Attendance of directors at the board meetings held during 2006-2007 and the last Annual General Meeting (AGM) Directors Meetings held Meetings during the attended tenure of Directors 5 5 5 5 4 4 4 4 5 3 Attendance at the last AGM Present Present Commit ommitt Companies Ac t, 1956), Chairmanships and the Committee memberships held by the directors as on March 31, 2007. Name of directors Number of Committee(s) 1 directorship membership (including the (including RCL) Company) Membership 2 Chairmanship 7 1 8 2 4 2 6 1 Nil 1 2 -
Shri Anil D. Ambani Shri Amitabh Jhunjhunwala Shri Rajendra P. Chitale Shri C. P. Jain
1. The information provided above pertains to the following committees in accordance with the provisions of clause 49 of the listing agreement: a. Audit committee b. Shareholders/investors' grievances committee 2. Membership of committees includes chairmanship, if any. 6. Membership of board committees No director holds membership of more than 10 committees of boards nor any director is a chairman of more than 5 committees of boards. 7. Details of Directors The abbreviated resumes of all Directors are furnished hereunder: Shri Anil Dhirubhai Ambani, regarded as one of the foremost corporate leaders of contemporary India, Shri Anil D. Ambani, 48, is the Chairman of all listed companies of the Reliance ADA Group, namely, Reliance Communications, Reliance Capital, Reliance Energy and Reliance Natural Resources Ltd. He is also the president of the Dhirubhai Ambani Institute of Information and Communications Technology, Gandhinagar. An MBA from the Wharton School of the University of Pennsylvania, Shri Ambani is credited with pioneering several financial innovations in the Indian capital markets. He spearheaded the country's first forays into overseas capital markets with international offerings of global depository receipts, convertibles and bonds. Under his chairmanship, the constituent companies of the Reliance ADA Group have raised nearly US$ 3 billion from global financial markets in a period of less than 15 months. Shri Ambani has been associated with a number of prestigious academic institutions in India and abroad. He is currently a member of: Wharton Board of Overseers, The Wharton School, USA Board of Governors, Indian Institute of Management (IIM), Ahmedabad Board of Governors, Indian Institute of Technology (IIT), Kanpur Executive Board, Indian School of Business (ISB), Hyderabad In June 2004, Shri Ambani was elected as an Independent member of the Rajya Sabha - Upper House, Parliament of India, a position he chose to resign voluntarily on March 25, 2006.
Shri Anil D. Ambani Shri Amitabh Jhunjhunwala Shri Rajendra P. Chitale Shri C. P. Jain Shri Udayan Bose*
* Shri Udayan Bose ceased to be Director with effect from December 23, 2006. Notes: a. None of the directors is related to any other director. b. None of the directors has any business relationship with the company. c. None of the directors received any loans and advances from the company during the year.
5. Other directorships None of the directors holds directorships in more than 15 public limited companies. The details of directorships (excluding private limited, oreign compan ompany companies sec ection foreign company and companies under section 25 of the
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Reliance Capital Limited
ORPORATE GOVERNANCE (Cont ontd...) C ORPORATE GO VERNANCE (C ont d...) Select Awards and Achievements Voted 'the Businessman of the Year' in a poll conducted by The Times of India - TNS, December 2006. Voted the 'Best role model' among business leaders in the bi-annual Mood of the Nation poll conducted by India Today magazine, August 2006. Conferred 'the CEO of the Year 2004' in the Platts Global Energy Awards. Conferred 'The Entrepreneur of the Decade Award' by the Bombay Management Association, October 2002. Awarded the First Wharton Indian Alumni Award by the Wharton India Economic Forum (WIEF) in recognition of his contribution to the establishment of Reliance as a global leader in many of its business areas, December 2001. Selected by Asiaweek magazine for its list of 'Leaders of the Millennium in Business and Finance' and was introduced as the only 'new hero' in Business and Finance from India, June 1999. Amitabh Jhunjhunwala, Shri Amitabh Jhunjhunwala, 51, is a Fellow Chartered Accountant. He has vast experience in the areas of financial services and capital markets. Shri Jhunjhunwala was appointed to the Board on March 7, 2003 and was appointed Vice Chairman on March 20, 2006. He is a Director on the Board of Harmony Art Foundation and Reliance Anil Dhirubhai Ambani Group Pvt. Ltd. Rajendr P. Chital ajendra ale, Shri Rajendra P. Chitale, 46, an eminent Chartered Accountant, is the Managing Partner of M/s M. P. Chitale & Associates. He is a Director on boards of the National Securities Clearing Corporation Limited, Asset Reconstruction Company (India) Ltd, Hinduja TMT Limited, HTMT Global Solutions Ltd, Ambuja Cement Limited, SME Rating Agency of India Limited, Ishan Real Estate PLC and Reliance General Insurance Company Ltd. He is also a member of the advisory board of the Insurance and Regulatory Authority of India (IRDA). He has also served on the boards of Life Insurance Corporation of India, Unit Trust of India, SBI Capital Markets Ltd., National Stock Exchange of India Ltd. and Small Industries Development Bank of India. P. Shri C. P. Jain, 61, is the former Chairman and Managing Director of NTPC Ltd. (National Thermal Power Corporation). Shri Jain has an illustrious career spanning over four decades of contribution in the fields of financial management, general management, strategic management and business leadership. He is a fellow member of the Institute of Chartered Accountants of India with an advanced diploma in Management and is a law graduate. Shri C. P. Jain joined the Board of NTPC in 1993 as Director (Finance), was elevated as Chairman & Managing Director in September 2000 and superannuated in March 2006. He is Chairman of the Global Studies Committee of World Energy Council (WEC), world's largest energy NGO with nearly hundred member-nations. He has been on several important committees of the Government of India, latest being the 'Adhoc Group of Experts on Empowerment of CPSEs'. He was Chairman of Standing Conference of Public Enterprises (SCOPE) between April 2003 and March 2005. He is a Director on the Board of IL & FS Infrastructure Development Corporation and, is also a member of the Audit Advisory Board of the Comptroller and Audit General of India. 8. Insurance coverage The company has obtained director's liability insurance coverage in respect of any legal action that might be initiated against directors. Commit ommitt II. Audit Committee: The Audit Committee has been reconstituted w.e.f. December 23, 2006 due to the resignation of Shri Udayan Bose as a Director of the company and consequently he ceased to be a member of the Committee. The Audit Committee presently comprises of three non-executive Directors, viz, Shri Rajendra P. Chitale, Shri Amitabh Jhunjhunwala, and Shri C. P. Jain. Shri Rajendra P. Chitale an Independent non-executive Director, is the Chairman of the Committee. All the members of Audit Committee have good knowledge of finance, accounts and company law. The Chairman of the committee, is an eminent chartered accountant and has accounting and related financial management expertise. The committee held four meetings during the year. The audit committee also advises the management on the areas where internal audit can be improved. The minutes of the meetings of the audit committee are placed before the board. The terms of reference of the audit committee are in accordance with all the items listed in clause 49 (II) (D) and (E) of the listing agreement and section 292A of the Companies Act, 1956, as follows: 1. Overseeing of the company's financial reporting process and the disclosure of its financial information to ensure that the financial information is correct, sufficient and credible. 2. Recommending the appointment, reappointment and replacement/removal of statutory auditors and fixation of audit fee. 3. Approve payment for any other services by statutory auditors. 4. Reviewing with management the annual financial statements before submission to the board, focusing primarily on; a. Matters required to be included in the directors’ responsibility statement included in the report of the board of directors. b. Any changes in accounting policies and practices. c. Major accounting entries based on exercise of judgement by management. d. Qualifications in draft statutory audit report. e. Significant adjustments arising out of audit. f. Compliance with listing and other legal requirements concerning financial statements. g. Any related party transactions. 5. Reviewing with the management the quarterly financial statements before submission to the board for approval. 6. Reviewing with the management, external and internal auditors, the adequacy of internal control systems. 7. Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 8. Discussion with internal auditors any significant findings and follow up thereon. 9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud
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Reliance Capital Limited
ORPORATE GOVERNANCE (Cont ontd...) C ORPORATE GO VERNANCE (C ont d...) or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board. 10. Discussion with statutor y auditors before the audit commences about nature and scope of audit as well as post-audit discussion to ascertain any area of concern. 11. To look into the reasons for substantial defaults in the payment to the depositors, debentureholders, shareholders (in case of non-payment of declared dividends) and creditors. 12. To review the functioning of the Whistle Blower mechanism, in case the same is existing. 13. Carrying out any other function as is mentioned in the terms of reference of the audit committee. 14. Review the following information: a Management discussion and analysis of financial condition and results of operations; b Internal audit reports relating to internal control weaknesses; c Management letters / letters of internal control weaknesses issued by statutory / internal auditors; d Statement of significant related party transactions; and e The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee. The Audit Committee has the following powers: i. to investigate any activity within its terms of reference. ii. to seek any information from any employee. iii. to obtain outside legal and professional advice. iv. to secure attendance of outsiders with relevant expertise, if it considers it necessary. Attendance at the meetings of the audit committee held during 2006-2007 Members Meetings held during the tenure of directors Shri Amitabh Jhunjhunwala 4 Shri Rajendra P. Chitale 4 Shri C. P. Jain 1 Shri Udayan Bose* 3 Meetings attended 4 3 1 3 *Shri Udayan Bose ceased to be the member of the Audit Committee w.e.f. December 23, 2006 due to his resignation as Director of the Company. The audit committee held its meetings on April 24, 2006, July 18, 2006, October 26, 2006 and January 30, 2007. Minimum and maximum gap between any two meetings was 85 days and 100 days respectively. The Company Secretary Shri V. R. Mohan acts as the Secretary to the Committee. Remuner emuneration Commit ommitt III. Nomination / Remuneration Committee The nomination/remuneration committee of the board is constituted to formulate from time to time, (a) process for selection and appointment of new directors and succession plans; and (b) a compensation structure for the members of the board. Shri Rajendra P. Chitale is the Chairman of the Committee and the other members are Shri Amitabh Jhunjhunwala and Shri C. P. Jain. The Company currently has no executive Directors. The Shareholders of the Company, by passing a special resolution by way of postal ballot, have approved payment of commission to the non-executive directors upto 3% of the net profits, subject to approval by the Central Government. The nomination/remuneration committee at its meeting held on January 30, 2007 approved making an application to the Central Government for payment of such commission. All the members of the nomination/remuneration committee were present at the said meeting. The Company pursuant to its application has obtained approval from the Central Government vide letter No. 12/255/2007-CL.VII dated April 19, 2007 for payment of Commission to Non Executive Directors upto a limit of 3% of the profits of the Company for a period of 5 years from the financial year commencing April 1, 2006. It is also proposed to introduce a stock option scheme for the directors of the company in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as approved by the members. Pending the implementation of the above, the committee did not hold any other meeting during the year.
ye Sitting fees to direc ors ect Sitting fees paid to directors during the year 2006-2007 Sr. Sr. No. 1 2 3 4 5 Name Position Sitting Fees Rs. 40 000 1 30 000 1 20 000 70 000 60 000 Salary and Perquisites Rs. Commission Rs. To tal Rs. 40 000 1 30 000 1 20 000 70 000 60 000 4 20 000
Shri Anil D. Ambani Shri Amitabh Jhunjhunwala Shri Rajendra P. Chitale Shri C. P. Jain Shri Udayan Bose*
Chairman Vice Chairman Director Director Director
To tal 4 20 000 * Shri Udayan Bose ceased to be the Director of the Company w.e.f. December 23, 2006.
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Reliance Capital Limited
ORPORATE GOVERNANCE (Cont ontd...) C ORPORATE GO VERNANCE (C ont d...) Notes: a. The company has not entered into any other pecuniary relationship or transactions with the non-executive directors. b. The company has so far not issued any stock options to its directors. Equity shares held by directors Except Shri Anil D. Ambani who held 2,73,891 equity shares and Shri Rajendra P. Chitale who held 4,000 equity shares as at March 31, 2007, no other director of the company held any equity shares of the Company. Directors' remuneration policy The nomination / remuneration committee determines, the compensation of the directors including their commission and ESOPs. The key components of the company's remuneration policy are: compensation will be a major driver of performance and contribution. compensation will be competitive and benchmarked with a selected group of companies from the financial services sector. compensation will be transparent, fair and simple to administer. compensation will be fully legal and tax compliant. Detail ails remuner emuneration to Manag for anager ye Details of remuneration paid to Manager for the year The Board appointed Shri V. R. Mohan as Manager under Companies Act, 1956, w.e.f. March 7, 2006 for a period of 5 years. The aggregate value of salary, allowances and perquisites paid to Shri V. R. Mohan, Manager for the year ended March 31, 2007 was Rs. 25 lakh. The above amount is inclusive of Company's contribution to Provident Fund, Superannuation and Gratuity at the end of tenure, as per the rules of the Company. I V. Shareholders/investors' grievances committee: The shareholders/investors’ grievances committee of the Board currently comprises Shri Amitabh Jhunjhunwala (as Chairman) and Shri Rajendra P. Chitale. The company has appointed M/s. Karvy Computershare Pvt. Ltd. to act as Registrar and Share Transfer Agent of the company. The committee also monitors redressal of investors' grievances. Particulars of investors grievances received and redressed are furnished in the investor information section of this report. The composition of the committee and the number of meetings held during the year are furnished hereunder. Attendance of members at the meeting of the shareholders/ investors' grievances committee held during 2006-07 Members Meetings held Meetings during the tenure attended of Directors 3 3 3 3
Shri Amitabh Jhunjhunwala Shri Rajendra P. Chitale
Shri V. R. Mohan, Company Secretary, is the compliance officer. The shareholders/investors' grievances committee held its meetings on April 24, 2006, July 18, 2006 and January 30, 2007. The total number of complaints received and replied to the satisfaction of shareholders during the year under review were 625. There were no complaints pending as on March 31, 2007. The details of period taken on transfer of shares and nature of complaints are furnished in the investor information section of this annual report. 140 requests for transfer and 143 requests for dematerialisation were pending for approval as on March 31, 2007 which were approved, processed on April 2, 2007 and dispatched on or before April 5, 2007.
V. General Body Meetings: The company held its last three Annual General Meetings as under: Ye ar Location Date July 10, 2004 Time 11.00 a.m Whether Special Resolution passed or not Delisting the equity shares of the Company from the Stock Exchange, Ahmedabad No No
2003-2004 Village Meghpar/Padana, Taluka Lalpur, Dist.-Jamnagar, Gujarat. 2004-2005 Village Meghpar/Padana, Taluka Lalpur, Dist. - Jamnagar, Gujarat. 2005-2006 Village Meghpar/Padana, Taluka Lalpur, Dist. - Jamnagar, Gujarat.
August 17, 2005 10.30 a.m June 9, 2006 11.00 a.m
During the year, the Company held an Extraordinary General Meeting on April 25, 2006 for passing a special resolution relating to cancellation of equity shares consequent to the Scheme of Amalgamation and Arrangement of Reliance Capital Ventures Ltd. with Reliance Capital Ltd. and their respective shareholders and creditors. VI. Postal Ballot During the year under review the Company conducted two postal ballots on June 9, 2006 and November 28, 2006 as required under the Companies (Passing of Resolution by Postal Ballot) Rules, 2001. Shri Sunil Khandelwal and Shri Anil Lohia, Chartered Accountants, were appointed respectively as the scrutinizer for overseeing the Postal Ballot process. The special resolutions were passed by the requisite majority. The results of the postal ballot were announced on July 21, 2006 and January 8, 2007, respectively and the details are as follows:
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Reliance Capital Limited
ORPORATE GOVERNANCE (Cont ontd...) C ORPORATE GO VERNANCE (C ont d...) Postal ballot results Date Compl ompletion Date of Completion of Postal Ballot July 20, 2006 (results declared on July 21, 2006) articulars ticular resol esolutions Par ticulars of special resolutions Percentage of votes fa cast in favour of resolution 99.95
Special resolution under Section 81 (1A) of the Companies Act, 1956 for issue of securities under the Employee Stock Option Scheme Special resolution under Section 309 (4) of the Companies Act, 1956 for payment of commisson to Director(s) who are neither in the Wholetime employment nor managing director (s) Special resolution under Section 17 of the Companies Act, 1956 for shifting of Registered office of the company from the State of Gujarat to the State of Maharashtra
99.90
99.94
January 6, 2007 (results declared on January 8, 2007)
Special resolution under Section 81 (1A) of the Companies Act, 1956 for issue of securities under the Employee Stock Option Scheme Special resolution under Section 81 (1A) of the Companies Act, 1956 for issue of securities under the Employee Stock Option Scheme to the employees and directors of the holding / subsidiary companies
99.95
99.93
The company has complied with the procedures for the postal ballot in terms of the Companies (Passing of Resolution by Postal Ballot) Rules, 2001 and amendments thereto. The board does not recommend any special resolution for approval of the members at the ensuing Annual General Meeting. VII. Means of communication Information like quarterly financial results and media releases on significant developments in the company as also presentations that have been made from time to time to the media, institutional investors and analysts are hosted on the company's web site and has also been submitted to the stock exchanges on which the company's equity shares are listed, to enable them to put them on their own web sites. The Quarterly financial results are published in Free Press Journal (Mumbai edition), Business Standard (Ahmedabad edition) English language and Noobot (Jamnagar edition) Gujarati language, Navshakti - (Mumbai edition) Marathi language. EDIFAR VIII. EDIFAR As per the requirements of clause 51 of the listing agreement with the stock exchanges, all the data relating to quarterly financial results, shareholding pattern, etc. are being electronically filed on the electronic data information filing and retrieval (EDIFAR) website of SEBI (www.sebiedifar.nic.in) within the timeframe prescribed in this regard. ompliance other mandatory requirements ator equirement IX. Compliance with other mandatory requirements 1. Management discussion and analysis A management discussion and analysis report forms part of the annual report and includes discussions on various matters specified under clause 49(IV)(F) of the listing agreement. 2. Subsidiaries Reliance General Insurance Company Ltd. (RGICL) is a material non-listed Indian subsidiary company in terms of clause 49 (III) of the listing agreement. Accordingly Shri Rajendra P. Chitale an independent director of the company has been appointed on the board of RGICL. The minutes of the meetings of the board of directors of all subsidiary companies are placed before the board of directors of the company and the attention of the directors is drawn to all significant transactions and arrangements entered into by the subsidiary companies. 3. Disclosures a. Related party transactions The company has entered into related party transactions as set out in the notes to accounts, which are not likely to have a conflict with the interest of the company. The details of all significant transactions with related parties are periodically placed before the audit committee (Refer note no. 11 of schedule “M”). b. No Penalty or strictures No penalty or stricture has been imposed on the company by the stock exchanges or SEBI or any other statutory authority, on any matter related to the capital markets, during the last 3 years. c. Disclosure of accounting treatment In the preparation of financial statements, the company has followed the Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable. d. Disclosures on risk management The company has laid down procedures to inform the members of the board about the risk assessment and minimisation procedures. A risk management committee consisting of senior executives of the company periodically reviews these procedures to ensure that executive management controls risk through means of a properly
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Reliance Capital Limited
ORPORATE GOVERNANCE (Cont ontd...) C ORPORATE GO VERNANCE (C ont d...) defined framework. The company has framed the risk assessment and minimisation procedure which is periodically reviewed by the Audit Committee and the Board. ocee eeds fr preferential efer warrants arrant e. Proceeds from the preferential issue of warrant s The details of utilisation of proceeds raised through issue of equity shares/warrants are disclosed to the audit committee and in the balance sheet. The company has not utilised these funds for purposes other than those stated in the notice convening the general meeting. f. conduc onduct Code of conduct The Company adopted the code of conduct and ethics for directors and senior management. The code has been circulated to all the members of the board and senior management and the same has been put on the company's website www.reliancecapital.co.in. The board members and senior management have affirmed their compliance with the code and a declaration signed by the Manager of the Company appointed in terms of the Companies Act, 1956 (i.e. the CEO within the meaning of clause 49-V of the listing agreement) is given below: It is hereby declared that the company has obtained from all members of the board and senior management affirmation that they have complied with the code of conduct for directors and senior management of the company for the year 2006-07. V. R. Mohan Manager g. CEO/CFO certification A certificate from the CEO and CFO was placed before the board. 3. Shareholder rights The quarterly financial results including summary of significant events of relevant period of six months are published in newspapers and hosted on the website of the company. 4. Audit qualifications Strategic decisions were taken during the year resulting in unqualified financial statements of the company. 5. Training of board members board members A programme has been devised to train board members in the business model of the company, risk profile of the business parameters and their responsibilities as directors. 6. Whistle blower policy The company has formulated a policy to prohibit managerial personnel from taking adverse personnel action against employees disclosing in good faith alleged wrongful conduct on matters of public concern involving violation of any law, mismanagement, gross waste or misappropriation of public funds, substantial and specific danger to public health and safety or an abuse of authority. The policy also lays down the mechanism for making enquiry in to whistle blower complaint received by the company. Employees aware of any alleged wrongful conduct are encouraged to make a disclosure to the audit committee. Employees knowingly making false allegations of alleged wrongful conduct to the audit committee shall be subject to disciplinary action. No personnel of the company have been denied access to the grievance redressal mechanism of the company. General shareholder information XI. General shareholder information The mandatory as also various additional information of interest to investors is voluntarily furnished in a separate section on investor information elsewhere in this report. Auditor's certificate on corporate governance The Auditors certificate on compliance of clause 49 of the listing agreement relating to corporate governance is published elsewhere in this report. Review of governance practices We have in this report attempted to present the governance practices and principles being followed at Reliance Capital, as evolved over the years, and as best suited to the needs of our business and stakeholders. Our disclosures and governance practices are continually revisited, reviewed and revised to respond to the dynamic needs of our business and ensure that our standards are at par with the globally recognised practices of governance, so as to meet the expectations of all our stakeholders.
h. Review of directors' responsibility statement The board in its report have confirmed that the annual accounts for the year ended March 31, 2007 have been prepared as per applicable Accounting Standards and policies and that sufficient care has been taken for maintaining adequate accounting records. ompliance non-mandatory requirements ator equirement X. Compliance with non-mandatory requirements enure direc ors ect board 1. Tenure of independent directors on the board The tenure of independent directors on the board of the company shall not exceed, in the aggregate, a period of nine years. emuneration Commit ommitt 2. Remuneration Committee The board has set up a remuneration committee details whereof are furnished at Sr. No. III of this report.
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Reliance Capital Limited
INFORMA ORMATI IN VE S T OR INF ORMA TI ON Annual General Meeting The Twenty First Annual General Meeting will be held on Tuesday, July 3, 2007 at 11.00 a.m. at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020. Financial year of the company The financial year of the company is from April 1 to March 31 each year. ebsit site: Website: The website of the company www.reliancecapital.co.in contains a sub-menu on Investor Relations. It carries comprehensive information of interest to our investors including on the results of the company, dividends declared by the company, any price sensitive information disclosed to the regulatory authorities from time to time, business activities of the company and the services rendered / facilities extended by the company to our investors. Dedicate dicat for investor ors: Dedicated email id for investors: For the convenience of our investors, the Company has designated an exclusive email id for investors i.e. rcl.investor@relianceada.com. ompliance Officer: Compliance Officer: Shri V. R. Mohan, Company Secretary & Manager is the Compliance Officer of the Company. egistrar Share ansfer Agent (RT ents: Registrar and Share Transfer Agent s: (RTA) M/s. Karvy Computershar Private Limite omputershare rivat M/s. Karvy Computershare Private Limited Unit: Reliance Capital Limited Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad 500 081. Tel. No: 040 2342 0815-8025 Fax No: 040 2342 0859 e-mail: rclinvestor@karvy.com Shareholders/investors are requested to forward share transfer documents, dematerialisation requests and other related correspondence directly to Karvy Computershare Private Limited at the above address for speedy response. Dividend announcements The Board of Directors of the Company have recommended a dividend of Rs. 3.50 (35%) per equity share of the company for the financial year ended March 31, 2007, subject to the approval by shareholders at the Annual General Meeting (AGM). The dividend, if approved, will be paid on or after July 3, 2007. closur dat for osure ates purpose Book closure dates for the purpose of dividend and AGM To determine the entitlement of shareholders to receive the final dividend, if any, for the year ended March 31, 2007, the Register of Members and Share Transfer Books of the Company will remain closed from Friday, June 1, 2007 to Friday, June 15, 2007 (both days inclusive) as well as for the purpose of AGM. Dividend remittance Dividend on equity shares as recommended by the directors for the year ended March 31, 2007, when declared at the meeting, will be paid: (i) to those members whose names appear on the register of members of the company, after giving effect to all valid share transfers in physical form lodged with the Company on or before May 31, 2007, and (ii) in respect of shares held in electronic form, to those "deemed members" whose names appear in the statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as at the end of business hours on May 31, 2007. With respect to payment of dividend, the Company provides the facility of ECS to all shareholders, holding shares in electronic and physical forms, residing in the following cities: Ahmedabad, Bangalore, Bhubneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram. Unclaimed Dividends ansfer to Centr Gov entral (i) Transfer to the Central Government Pursuant to section 205A of the Companies Act, 1956, unclaimed dividends upto and including for the financial year 1993-94 have been transferred to the General Revenue Account of the Central Government. The shareholders who have not encashed their dividend warrants relating to financial year(s) upto 1993-94 are requested to claim the amounts from the Registrar of Companies, Maharashtra, CGO Complex, 2nd Floor, "A" Wing, CBD Belapur, Navi Mumbai 400 614, Telephone: (022) 2757 6802 in the prescribed form which will be furnished by the company on request. ansfer to Investor Education Pr ection Fund (ii) Transfer to the Investor Education and Protection Fund The dividends for the year 1994-95 to 1998-99 remaining unclaimed for 7 years from the date of declaration have been transferred to the Investor Education and Protection Fund established by the Government of India pursuant to section 205C of the Companies Act, 1956. Consequently, no claim shall lie against the said Fund or the company in respect of any amounts which were unclaimed and unpaid for a period of seven years from the date they first become due for payment. to transferre to ansferr Investor Education (iii) Dividends to be transferred to the Investor Education and ection Fund Protection Fund (IEPF) The dividend for the following years remaining unclaimed for 7 years from the date of declaration are required to be transferred by the company to IEPF and the various dates for transfer of such amounts are as under: Financial year 31-3-2000 31-3-2001 31-3-2002 31-3-2003 31-3-2004 31-3-2005 31-3-2006 Date of declaration 24-6-2000 16-6-2001 6-7-2002 28-6-2003 10-7-2004 17-8-2005 9-6-2006 fo transf ansfer Due fo r transfer on 23-6-2007 15-6-2008 5-7-2009 27-6-2010 9-7-2011 16-8-2012 8-6-2013
Members who have so far not encashed their dividend warrants or have not received the dividend warrants are requested to seek issuance of duplicate warrants. The company during the year 2006-07 has also individually intimated the concerned members of non-encashment of their dividend warrants. Such members may write to the RTA of the company, for payment of unclaimed dividend amounts.
25
Reliance Capital Limited
INVE INFORMA ORMATI (Cont ontd...) IN VE S T OR INF ORMATI ON (C ont d...) Direct deposit of dividend (electronic clearing service) Members desirous of receiving dividend by direct electronic deposit to their bank accounts may authorise the company with their mandate. For details, kindly write to the RTA of the company or visit the investor relations section at our website www.reliancecapital.co.in. detail for physical shareholding ails eholdings Bank details for physical shareholdings In order to provide protection against fraudulent encashment of dividend warrants, members are requested to provide, if not provided earlier, their bank account numbers, bank account type, names and addresses of bank branches, quoting folio numbers, to the registrar and share transfer agents of the company to enable them to incorporate the same on their dividend warrants. This is a mandatory requirement in terms of Securities and Exchange Board of India (SEBI) circular no. D&CC/FITTC/CIR04/2001 dated November 13, 2001. detail for electronic shareholding ails ectr eholdings Bank details for electronic shareholdings While opening Accounts with depository participants (DPs), you may have given your bank accounts details, which will be used by the company for printing on dividend warrants for remittance of dividend. SEBI vide its circular no. DCC/FITTCIR-3/2001 dated October 15, 2001 has advised that all companies should mandatorily use electronic clearing service (ECS) facility, wherever available. SEBI has also, vide its circular dated November 13, 2001 referred to above, advised companies to mandatorily print the bank account details furnished by the depositories, on the dividend warrants. This ensures that the dividend warrants, even if lost or stolen, cannot be used for any purpose other than for depositing the monies in the account specified on the dividend warrants and ensures safety for the investors. However, members who wish to receive dividend in an account other than the one specified while opening the depository account, may notify their DPs about any change in bank account details. Members are requested to furnish complete details of their bank accounts including MICR codes of their banks to their DPs. facilit acility Nomination facility Individual shareholders of physical shares can nominate any person for the shares held by them. This will save the nominee from going through the lengthy process of getting the shares later on transmitted to his/her name. For further details, shareholders may write to the RTA of the company or visit the investor relations section at our website www.reliancecapital.co.in. Share transf system ansfer Share transfer sy stem Shareholders / investors are requested to send share transfer related documents directly to our RTA whose address is given at the beginning of this section. A committee of executives of the company is authorised to approve transfer of shares. If the transfer documents are in order, the transfer of shares is registered within 7 days of receipt of transfer documents by our RTA. lo shares for small shareholder eholders Odd lo t shares scheme for small shareholders In view of the difficulty experienced by the shareholders of the Company in selling their odd lot shares in the stock market and to mitigate the hardships caused to them, Reliance Anil Dhirubhai Ambani Group has framed a scheme for the purchase and disposal of odd lot equity shares at the prevailing market rate price. The scheme to be launched will be available to the shareholders of Reliance Capital Ltd. who hold upto 49 shares in physical form. The shareholders who wish to avail the above facility can contact the RTA of the Company. Group coming within the definition of group as defined in Monopolies Restrictive estrictiv Practic tices the Monopolies and Restrictive Trade Practices Ac t, 1969 (54 of 1969). The following persons constitute the Group coming within the definition of group as defined in the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969), which exercises, or is established to be in a position to exercise, control, directly or indirectly, over the company. Shri Anil Dhirubhai Ambani Smt. Tina A. Ambani Smt. Kokila D. Ambani Master Jai Anmol Ambani Master Jai Anshul Ambani Reliance Innoventures Private Limited AAA Enterprises Private Limited AAA Communication Private Limited AAA Project Ventures Private Limited AAA Power Systems (Global) Private Limited Anadha Enterprise Private Limited Bhavan Mercantile Private Limited Reliance General Insurance Company Limited Sonata Investments Limited Hansdhwani Trading Company Private Limited Reliance Limited Reliance India Private Limited Dhirubhai Ambani Enterprises Private Limited K.D. Ambani Trust AAA Industries Private Limited Reliance Enterprises and Ventures Private Limited AAA Global Ventures Private Limited Ambani Industries Private Limited AAA International Capital Private Limited Ambani International Private Limited AAA Business Machines Private Limited Reliance Big Private Limited ADA Enterprises and Ventures Private Limited ADAE Global Private Limited Ikosel Investments Limited Ashban Company Limited Duns Holdings Limited Lagerwood Investments Limited Reliance Land Private Limited Reliance Net Limited Reliance Communications Limited Reliance Energy Limited Reliance Natural Resources Limited Adlabs Films Limited Reliance Energy Generation Limited Reliance Telecom Infrastructure Limited Reliance Communications Infrastructure Limited Reliance Telecom Limited The above disclosure has been made, inter alia, for the purpose of Regulation 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
26
Reliance Capital Limited
INVE INFORMA ORMATI (Cont ontd...) IN VE S T OR INF ORMATI ON (Cont d...) Shareholding pattern Category A Holdings of the Promoter Group AAA Enterprises Pvt. Ltd. Anil D. Ambani Tina A. Ambani Kokila D. Ambani Jai Anmol A. Ambani Jai Anshul A. Ambani Reliance Innoventures Private Limited Hansdhwani Trading Company Private Limited Reliance Capital Ventures Limited Sub-total B 1 Non-promoters holdings Institutional investors a. Mutual Funds and Unit Trust of India b. Banks, Financial Institutions, Insurance Companies, Governments c. Foreign Institutional Investors Sub-total 2 Others a. Private Corporate Bodies b. Indian Public/Others c. Non Resident Indians/ Overseas Corporate Bodies d. GDRs Sub-total Grand total As on 31-03-2007 No. of shares % 12 63 2 2 5 89 73 63 45 83 839 891 474 126 487 51.45 0.11 0.11 0.22 0.03 0.23 52.16 As on 31-03-2006 No. of shares % 7 93 1 1 3 03 80 80 61 351 933 933 866 35.58 0.08 0.08 0.16 26.96 62.87
5 5 76 450 2 12 81 32 274
6 00 89 966 14 01 17 049
14 88 713 43 05 152 7 50 09 030 8 08 02 895 39 72 642 3 05 03 315 10 46 252 11 75 422 3 66 97 631 24 56 32 800
0.61 1.75 30.54 32.90 1.62 12.42 0.43 0.48 14.94 100.00
32 55 161 99 507 4 72 29 761 5 05 84 429 71 97 235 2 45 40 376 4 27 156 3 21 64 767 22 28 66 245
1.46 0.04 21.19 22.70 3.23 11.01 0.19 14.43 100.00
Notes: Change in the capital of the company, during the year was on account of: 1. Allotment of 6,11,56,521 equity shares and cancellation of 6,00,89,966 equity shares pursuant to the scheme of amalgamation and arrangement between the erstwhile Reliance Capital Ventures Ltd. with the Company. 2. Allotment of 2,17,00,000 equity shares of Rs. 10 each pursuant to conversion of warrants issued on preferential basis on January 30, 2007. shareholder eholders Mar arch Top 10 shareholders as on March 31, 2007 Sr. Sr. No. Name of the shareholder 1 2 3 4 5 6 7 8 9 10 AAA Enterprises Private Limited Quantum (M) Limited Morgan Stanley and Co. International Limited A/C Morgan Stanley Dean Witter Mauritius Company Limited Goldman Sachs Investments (Mauritius) I Limited Merrill Lynch Capital Markets Espana S.A. S.V. Copthall Mauritius Investment Ltd. Life Insurance Corporation of India Acacia Institutional Partners, L P Macquarie Bank Limited Oppenheimer Funds Inc. A/C Oppenheimer Developing Markets Fund No. of shares 12 63 89 839 1 33 38 139 1 06 87 095 85 42 216 72 71 143 53 65 463 34 39 002 30 00 000 25 00 000 23 09 200 % 51.45 5.43 4.35 3.48 2.96 2.18 1.40 1.22 1.02 0.94
27
Reliance Capital Limited
INVE INFORMA ORMATI (Cont ontd...) IN VE S T OR INF ORMATI ON (C ont d...) Distribution of shareholding Number of shareholders as on 31.03.2007 Number of Shares Upto 500 501 to 5000 5001 to 100000 100000 and above To tal Number 13 23 801 6 347 375 78 % 99.48 0.48 0.03 0.01 shares To tal shares as on 31.03.2007 Number 2 33 45 515 69 39 193 73 62 718 20 79 85 374 % 9.50 2.83 3.00 84.67 Number of shareholders as on 31.03.2006 Number 1 51 947 5 311 319 56 % 96.39 3.37 0.20 0.04 shares To tal shares as on 31.03.2006 Number 1 69 77 366 62 39 361 59 10 228 % 7.62 2.80 2.65
19 37 39 290 86.93 22 28 66 245 100.00
13 30 601 100.00
24 56 32 800 100.00
1 57 633 100.00
Investors' grievances attended eceiv eive fr Received from Received during 2006-2007 SEBI Stock Exchanges NSDL/CDSL Direct from investors To tal Analysis of grievances 2006-2007 Percentage Numbers Non-receipt of dividends Non-receipt of share certificates Others To tal 362 187 76 625 57.92 29.92 12.16 100.00 2005-2006 Percentage Numbers 623 381 13 1017 61.26 37.46 1.28 100.00 79 51 13 482 625 2005-2006 59 40 918 1 017 Redressed during April to March 2006-2007 79 51 13 482 625 2005-2006 59 40 918 1 017 Pending as on 31.3.2007 31.3.2006 -
Notes : 1. Investors queries / grievances are normally attended within a period of 3 days from the date of receipt thereof, except in cases involving external agencies or compliance with longer procedural requirements specified by the authorities concerned. 2. The shareholder base has gone up to 13,30,601 as of March 31, 2007 from 1,57,633 as of March 31, 2006. 3. The queries and grievances received correspond to 0.06% of the number of members as of March 31, 2007 as compared to 0.65% as of March 31, 2006. Legal Proceedings There are certain pending cases relating to disputes over title to shares, in which the Company is made a party. These cases are however not material in nature. Dematerialisation of Shares The company was among the first few companies to admit its shares to the depository system of National Securities Depository Limited (NSDL) for dematerialization of shares. The International Securities Identification Number (ISIN) allotted to the company is INE013A01015. The company was the first to admit its shares and go 'live' on to the depository system of Central Depository Services (India) Limited (CDSL) for dematerialization of shares. The equity shares of the company are compulsorily traded in dematerialised form as mandated by Securities and Exchange Board of India (SEBI).
28
Reliance Capital Limited
INVE INFORMA ORMATI (Cont ontd...) IN VE S T OR INF ORMATI ON (C ont d...) Status of dematerialisation of shares: Electronic holdings No. of Beneficial Owners No. of Shares Per centage 87.66 No. of Folios Physical holdings No. of Shares Per centage 12.34 No. of Share holders 13 30 601 To tal No. of Shares Per centage
6 31 785 21 53 33 499
6 98 816 3 02 99 301
24 56 32 800 100.00
The company's equity shares are actively traded on the Indian Stock Exchanges. Equity history Details of issue of equity shares in the last two decades Sr. Sr. No. 1 2 3 Date 5-3-1986 21-6-1990 28-8-1992 articulars ticular For eitur orf ures Par ticulars of Issue / For feitures Shares issued upon incorporation 1st Public Issue Equity shares Issued upon amalgamation of Arasina hotels with the Company 1st Rights Issue 1992 with a ratio of 1:1 No. of shares 7 000 1 99 93 000 umulativ ative Cumulative To tal 7 000 2 00 00 000
18 70 000 2 18 77 500
2 18 70 000 4 37 47 500
4 5
10-2-1993 18-7-1994 & 29-10-1994 20-1-1995 17-2-1995 11-7-1995 to 13-11-1997 4-11-1996
Preferential Allotment to Promoters Public Issue 1995, Promoters / Institutions / NRI's etc. Rights Issue 1995
2 74 00 000 4 33 97 592 1 40 01 970
7 11 47 500 11 45 45 092 12 85 47 062
6 7 8
Allotment of Rights kept in abeyance Forfeiture of equity shares relating to Public Issues of 1990 and Rights Issue 1992 Forfeiture of equity shares relating to Public and Rights Issue 1995
1 03 388
12 86 50 450
9
(1 23 400)
12 85 27 050
10
27-4-2000
(12 61 455)
12 72 65 595
11
27-4-2000 to 29-7-2003 21-7-2005 2-8-2005 22-8-2005
Forfeited equity shares Annulled Preferential Allotment to FIIs Preferential Allotment to promoters Allotment to promoter upon Conversion of warrants on preferential basis Allotment to promoter upon Conversion of warrants on preferential basis Allotment pursuant to amalgamation Less: Shares extinguish due to RCVL merger Allotment to promoter upon Conversion of warrants on preferential basis
40 649 1 62 60 001 6 00 00 000
12 73 06 244 14 35 66 245 20 35 66 245
12 13 14
38 00 000
20 73 66 245
15
31-3-2006
1 55 00 000 6 11 56 521 (6 00 89 966)
22 28 66 245
16
7-8-2006 7-8-2006 30-1-2007
22 39 32 800
17
2 17 00 000
24 56 32 800
Note: Reliance Capital Ventures Limited (RCVL) holding 6,00,89,966 equity shares of the company, demerged from Reliance Industries Limited was merged with the company w.e.f. July 17, 2006. The shareholders of RCVL were allotted shares of the company in the ratio of 5 equity shares of the Company for every 100 shares of RCVL held as per the scheme of amalgamation and arrangement which resulted in Capital increasing by 10,66,555 shares.
29
Reliance Capital Limited
INVE INFORMA ORMATI (Cont ontd...) IN VE S T OR INF ORMATI ON (C ont d...) Stock Exchange listings The company is an actively traded scrip on the bourses. A. Stock Exchanges on which the shares of the company are listed 1. National Stock Exchange of India Ltd. Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051 Telephone Fax E-mail Website : : : : 022-2659 8235 / 36 022-2659 8237 / 38 cmlist@nse.co.in www.nseindia.com
2. Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai- 400001 Telephone Fax E-mail Website : : : : 022-2272 1233 / 4 022-2272 1919 corp.relations@bseindia.com www.bseindia.com
Stock Exchang change which Compan are liste ompany B. Stock Exchange on which the GDRs of the Company are listed Luxembourg Stock Exchange Societe de la Bourse De Luxembourg Societe Anonyme RC Luxembourg B 6222 BP 165 L - 2011 Luxembourg Siege Social 11, Avenue De la Porte-Neuve Depositor ory for holders C. Depository bank for GDR holders Deutsche Bank Trust Company Americas 60 Wall Street New York New York - 10005 D Stock codes for equity shares Stock codes for equity shares Physical Bombay Stock Exchange Limited 500111 RELCAPITAL National Stock Exchange of India Limited E Security Codes Security Codes of RCL GDRs Master Rule 144A GDRs CUSIP ISIN Common Code 75945L103 US75945L1035 026469457 Master Regulation S GDRs 75945L202 US75945L2025 026470315 Electronic INE 13A01015 INE 13A01015
Note: The GDRs are admitted to listing on the official list of the Luxembourg Stock Exchange and to trading on the Euro MTF market. The Rule 144A GDRs have been accepted for clearance and settlement through the facilities of DTC, New York. The Regulation S GDRs have been accepted for clearance and settlement through the facilities of Euroclear and Clearstream, Luxembourg. The Rule 144A GDRs have been designated as eligible for trading on PORTAL. Index An Index Scrip: Equity Shares of the Company are included in the Indices viz. BSE 100, BSE 200, BSE 500, CNX Nifty Junior, CNX 100, S&P CNX 500, CNX Service Sector, FTSE Medium Cap, MSCI etc. Outst standing compan con ersion dat ompany onv ate likel impact ely equity Outstanding GDRs of the company, conversion date and likely impact on equity Outstanding GDRs as on March 31, 2007 represent 11,75,422 equity shares constituting 0.48% of the paid up equity share capital of the company.
30
Reliance Capital Limited
INVE INFORMA ORMATI (Cont ontd...) IN VE S T OR INF ORMATI ON (C ont d...) Stock Pric rice olume Stock Price and Volume Monthly high and low quotations as also the volume of shares traded on the Bombay and National Stock Exchanges. Bombay Stock Exchange Limited 2006-07 April May June July August September October November December January February March Highest Rs. 570.05 631.50 522.20 495.35 486.30 570.90 584.55 608.60 620.40 655.85 723.30 670.30 Lowest Rs. 493.75 449.60 326.00 402.50 418.30 481.85 559.35 557.95 544.25 611.25 623.75 570.10 olume Volume Rs. 1 68 15 905 2 45 49 543 4 99 62 804 4 01 88 253 2 21 03 915 3 04 43 654 1 04 21 763 1 75 75 095 1 03 31 148 91 81 850 1 04 85 820 1 17 14 685 National Stock Exchange of India Ltd. Highest Rs. 571.90 640.30 527.00 507.40 494.25 575.45 594.00 619.10 629.50 670.70 729.00 679.50 Lowest Rs. 459.90 372.00 320.00 391.75 411.55 464.00 536.50 544.25 480.00 602.50 605.10 558.65 olume Volume Rs. 3 46 26 575 5 75 80 889 9 27 30 190 6 45 50 128 3 96 92 958 4 82 03 333 2 06 66 543 3 30 45 947 2 27 15 250 1 99 49 721 2 50 91 436 2 47 84 588
Share Pric Per ormance rice erf comparison to broad base indices BSE Sense Nift Share Price Performance in comparison to broad based indices - BSE Sensex and NSE Nifty During the financial year 2006-2007, RCL's share price outperformed the benchmark indices both on BSE and NSE. On BSE, RCL's share price increased by 28.47% as compared to an increase of 15.24% of BSE Sensex. Similarly, on NSE, RCL's share price increased by 27.05% against an increase of 12.29% of NSE Nifty.
RCL Share Price on BSE (Closing)
Comparative price chart 16000 14000 12000 10000 8000 6000 4000 2000 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 06 06 06 06 06 06 06 06 06 07 07 07 Month BSE Sensex RCL Share Price on BSE (Closing) 700 600 500 400 300 200 100 0
Comparative price chart
4500
700 600 500 400 300 200 100 Apr May Jun 06 06 06 Jul Aug Sep Oct Nov Dec Jan Feb Mar 06 06 06 06 06 06 07 07 07 Month 0
S&P CNX Nifty Close
4000 3500 3000 2500 2000 1500 1000 500 0
S&P CNX Nifty Close
RCL Share Price on NSE (Closing)
The share price of Reliance Capital and the values of BSE Sensex and NSE Nifty have been rebased to 100 for the purpose of performance comparison and the relative values have been accordingly computed. Depository services For guidance on depository services, shareholders may write to the RTA of the Company or National Securities Depository Limited, Trade World, A Wing, 4th and 5th Floors, Kamala Mills Compound, Lower Parel, Mumbai 400 013, Telephone: (022) 2499 4200, Facsimile: (022) 2497 2993 / 2497 6351, e-mail: info@nsdl.co.in, website: www.nsdl.com or Central Depository Services (India) Limited, Phiroze Jeejeebhoy Towers, 16th Floor, Dalal Street, Mumbai 400 023. Tel.: 022-2272 3333 Facsimile: (022) 2272 3199 / 2072, website: www.cdslindia.com, e-mail: investors@cdslindia.com. ommunication to members Communication to members The quar terly financial results of the company are announced within a month of the end of the respective quarter. The company's media releases and details of significant developments are also made available on the website. These are published in leading newspapers, in addition to hosting them on the company's website: www.reliancecapital.co.in.
31
RCL Share Price on NSE (Closing)
BSE Sensex
Reliance Capital Limited
INVE INFORMA ORMATI (Cont ontd...) IN VE S T OR INF ORMATI ON (C ont d...) Policy on insider trading The company has formulated a code of conduct for prevention of insider trading (RCL Code) in accordance with the guidelines specified under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended on February 20, 2002. The board has appointed Shri V. R. Mohan, Company Secretary & Manager as the Compliance Officer under the RCL code responsible for complying with the procedures, monitoring adherence to the rules for the preservation of price sensitive information, pre-clearance of trade, monitoring of trades and implementation of the code of conduct under the overall supervision of the board. The RCL code, inter alia, prohibits purchase and/or sale of shares of the company by an insider or by any other company, while in possession of unpublished price sensitive information in relation to the company during certain prohibited periods. The RCL code is available on the company's website. Secret etarial for rec econciliation capit apital Secretarial audit for reconciliation of capital The Securities and Exchange Board of India has directed vide circular no. D&CC/FITTC/CIR-16/2002 dated December 31, 2002 that all issuer companies shall submit a certificate of capital integrity, reconciling the total shares held in both the depositories, viz. NSDL and CDSL and in physical form with the total issued / paid up capital. The said certificate, duly certified by a qualified chartered accountant is submitted to the stock exchanges where the securities of the company are listed within 30 days of the end of each quarter and the certificate is also placed before the board of directors of the company. Financial Repor eporting Dates for Financial (F.Y .Y.) Key Financial Repor ting Dates for the Financial Year (F.Y.) 2007-08 Unaudited results for the first quarter ended June 30, 2007 Unaudited results for the second quarter / half year ended September 30, 2007 Unaudited results for the third quarter ended December 31, 2007 Audited results for the financial year 2007-08 Any queries relating to the financial statements of the company may be addressed to : Shri Ramkumar Krishnamachari Chief Financial Officer Reliance Capital Limited 'H' Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairane, Navi Mumbai 400 710. Telephone : (022) 3032 7000 Facsimile : (022) 3032 7202 Email : rcl.investor@relianceada.com : : : : On or before July 31, 2007 On or before October 31, 2007 On or before January 31, 2008 On or before June 30, 2008 Investors' correspondence may be addressed Complianc Officer ompliance Compan ompany to the Compliance Officer of the Company : Shri V. R. Mohan Company Secretary & Manager Reliance Capital Limited 'H' Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairane, Navi Mumbai 400 710. Telephone : (022) 3032 7000 Facsimile : (022) 3032 7202 Email : rcl.investor@relianceada.com
Plant Locations: The Company is engaged in the business of financial services and has no plant.
32
Reliance Capital Limited
INVESTOR SERVICE CENTRES OF KARVY COMPUTERSHARE PRIVATE LIMITED
Sr. No. City/Centre 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Agra Ahmedabad Aligarh Allahabad Anantapur Ankaleshwar Aurangabad Bangalore Bareilly Belgaum Bellary Bharuch Bhavnagar Bhimavaram Bhopal Bhubneshwar Calicut Chandigarh Chennai Narasaraopet Coimbatore Cuttack Dehradun Dindigul Durgapur Eluru Erode Ghaziabad Gobichettipalayam Gorakhpur Guntur Haldia Hubli Hyderabad Indore Jaipur Jamnagar Jamshedpur Junagadh Kakinada Kanpur Karaikudi Karur Kochi Kolkata STD Code 0562 079 0571 0532 08554 02646 02432 080 0581 0831 08392 02642 0278 08816 0755 0674 0495 0172 044 08647 0422 0671 0135 0451 0343 08812 0424 0120 04285 0551 0863 03224 0836 040 0731 0141 0288 0657 0285 0884 0512 04565 04324 0484 033 Phone - Office 2526660 to 63 26420422, 26400527, 28 2509106 to 08 2260291, 2260292 249601, 249607, 249608 243291, 243292 2363517, 23, 24, 30 26621192, 26621193 24676809, 3207699 2402544, 2402722 254531, 254532 225207, 225208 2567005, 2567006 231766, 67, 68, 69 3013113, 3010728, 3010731 2547531 to 3, 531532 2760882, 2760884 5071726 to 728, 28151793, 94, 4781 257501 to 503 2237501 to 506,4377211 2335175, 3110827 2713351, 2714046 2436077, 2436177 2586375 to 77 227851, 52, 54 2225603, 225615 2701886, 2701891 226275, 226276 2346519, 2333825 2326681, 2326686 276755 to 57 2232773, 2237774 23312454, 23320251 5069891, 5069892 2375039, 99, 2363321 2557862 to 65, 3299330 2487020, 2487045 2624154, 2624140 2387382, 2387383 2330127, 2331445, 3246390 237192, 237193 241892, 241893 2310884, 2316406, 2322152 24655006, 5392, 0982, 8369 2331445 2341891 241891 2323104 24644866 2353961 23312946 5069894 2378703 2349525 6641102 227854 2216160 231769 2760890 2546915 2369522 5071725 28153181 257502 2237507 2335175 2714047 2436077 41312645 2476797 2402933 254533 2561073 249608 26565551 Fax E-mail Id ksblagra@karvy.com ahmedabad@karvy.com aligarh@karvy.com ksblanantpur@karvy.com ksblanantpur@karvy.com ksblankleshwar@karvy.com ksblabad@karvy.com ircbangalore@karvy.com ksblbareilly@karvy.com ksblbelgaum@karvy.com ksblbellary@karvy.com ksblbharuch@karvy.com bhavnagar@karvy.com ksblbvaram@karvy.com ksblbhopal@karvy.com ksblbbsr@karvy.com ksblcalicut@karvy.com chandigarh@karvy.com ksblmadras@karvy.com ksblchpet@karvy.com ksblcomibatore@karvy.com ksblcuttack@karvy.com ksbldehradun@karvy.com dindigul@karvy.com ksbldurgapur@karvy.com ksbleluru@karvy.com erode@karvy.com ksblghaziabad@karvy.com gobi@karvy.com ksblgorakhpur@karvy.com ksblguntur@karvy.com ksblhaldia@karvy.com hubli@karvy.com anitha@karvy.com indore@karvy.com jaipur@karvy.com jamnagar@karvy.com jamshedpur@karvy.com junagadhdp@karvy.com ksblkakinada@karvy.com irckanpur@karvy.com karaikudi@karvy.com karur@karvy.com ksblcochin@karvy.com ksblcalcutta@karvy.com
33
Reliance Capital Limited
INVESTOR SERVICE CENTRES OF KARVY COMPUTERSHARE PRIVATE LIMITED
Sr. No. City/Centre 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 Lucknow Madurai Mangalore Mattancherry Mumbai (Andheri) Mumbai (Fort) Mysore Nadiad Nasik Nelloe New Delhi Palghat Panjim Patna Pondicherry Proddatur Pune Rajahmundry Rajkot Ranchi Dudhi Rourkela Salem Shimoga Surat Thanjavur Theni Tirupathi Tirupur Trichur Trichy Tumkur Udupi Vadodara Vallabh-Vidhyanagar Varanasi Vijayawada Vishakhapatnam Vishakapatnam Gajuwaka STD Code 0522 0452 0824 0484 022 022 0821 0268 0253 0861 011 0491 0832 0612 0413 08564 020 0883 0281 0651 05446 0661 0427 08182 0261 04362 04546 0877 0421 0487 0431 0816 0820 0265 02692 0542 0866 0891 0891 Phone - Office 2236820 to 26 2350855, 2350852 to 854 2492302, 2496332 22,232,432,211,229 26730799, 843, 311, 867 56382666, 56381746, 1747, 1748, 1749, 1750 2524292, 2524294 2563210, 2563245 2577811, 5602542 2349935, 2349936, 23499367 23324401, 23353835, 981 2547143, 2547373 2426870,71, 72,74 2321354,55 , 56, 57 2220636, 2220640, 250822, 250823, 250824 25539547-25532078, 25533795 2434468, 2434469 2239403, 2239404, 2239338 2330386, 2330394 254201 2510770, 2510771, 2510772 2335700 to 705 228795, 228796, 227485 3017155/60,58,59 279407, 279408 261285, 261108 2252756 2205865, 5330158 2,322,483,484,493,490 2798200, 2791000, 2791322 2725989, 2725990, 2725991 2261891, 2261892, 2261893 2530962, 2530963 2225325, 5168, 89 248980, 248873 2225365, 222814 2495200, 400, 500, 600,700,800 2752915 to 18 2511685, 2511686 2223814 2495300 2363207 2794132 4011924 2335705 2226747 3017155 25533742 2434471 2233179 2220659 2426873 2349939 23324621 26730152 22040171 Fax 2236826 2350856 2496283 E-mail Id adminluknow@karvy.com madurai@karvy.com mangalore@karvy.com ksblmattancherry@karvy.com pbamlani@karvy.com, mumbaiandheri@karvy.com shailesh@karvy.com, mumbaifort@karvy.com mysore@karvy.com nadiad@karvy.com ksblnasik@karvy.com ksblnellore@karvy.com ircdelhi@karvy.com palghat@karvy.com rksblpanajim@karvy.com ksblpatna@karvy.com ksblproddatur@karvy.com ksblprddatur@karvy.com rispune@karvy.com ksblrjm@karvy.com rajkotris@karvy.com ranchi@karvy.com renukoot@karvy.com rourkela@karvy.com salem@karvy.com shimoga@karvy.com ksblsurat@karvy.com tanjore@karvy.com jaya@karvy.com, theni@karvy.com ksbltirupati@karvy.com tirupur@karvy.com josephka@karvy.com trichy@karvy.com ksbltvm@karvy.com tumkur@karvy.com udupi@karvy.com ksblbaroda@karvy.com vvnagar@karvy.com ksblvaranasi@karvy.com vijayawada@karvy.com ksblvizag@karvy.com ksblgajuwaka@karvy.com
Thiruvananthapuram 0471
34
Reliance Capital Limited
AUDITORS’ REPORT To, The Members of Reliance Capital Limited We have audited the attached Balance Sheet of R elianc e eliance apital Limite Compan ompany'), Capital Limited ('the Company'), as at March 31, 2007 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 1. As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Order, 2004, issued by Central Government of India in terms of sub-section (4A) of Section 227 (4A) of the Companies Act 1956, we enclose in the Annexure hereto a statement on the matters specified in paragraphs 4 and 5 of the said order, to the extent applicable to the Company. Further to our comments in the Annexure referred to in paragraph (1) above, we state that: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; in our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears from our examination of those books; c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account; in our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement complies with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956; on the basis of written representations received from the directors as at March 31, 2007 and taken on record by the Board of Directors, we report that none of the directors of the Company are disqualified as on March 31, 2007 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; in our opinion and to the best of our information and according to explanations given to us, the said accounts together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) (ii) in the case of the Balance Sheet, of the State of Affairs of the Company as at March 31, 2007; in the case of the Profit and Loss Account, of the Profit, of the Company for the year ended on that date; and
d)
e)
f)
(iii) in the case of the Cash Flow Statement, of the Cash Flow for the year ended on that date. For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768
2.
b)
35
Reliance Capital Limited
ANNEXURE TO AUDITORS’ REPORT Referred to in para no. 1 of the Auditor’s Report to the members of Reliance Capital Ltd. (‘the Company’) on the financial statement for the year ended as on March 31, 2007 we report that: (i) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) As explained to us, all the fixed assets have been physical verified by the management in a phased periodical manner, which in our opinion is reasonable, having regards to the size of Company and nature of its assets. No material discrepancies were noticed on such physical verification. (c) As per information and explanations given to us, during the year, the Company has not disposed off any substantial part of fixed assets that would affect the going concern. (ii) In respect of its inventories (Investments including assets held for sale): (a) As explained to us, inventories (Investments including assets held for sale) has been physically verified by the management at reasonable intervals. (b) In our opinion and according to the information and explanations given to us, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business. (c) On the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, no material discrepancies have been noticed on physical verification of inventories as compared to book records. (iii) In respect of loans, secured or unsecured, granted or taken by the Company to/ from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956: (a) During the year the Company has granted unsecured loan amounting to Rs. 1,548.45 crore to a company. The maximum amount involved during the year and the year end balance of loan was Rs. 1,548.45 crore. The Company had given a loan in the past to a company whose maximum balance and the year end balance was Rs. 2 crore. (b) In our opinion and according to the information and explanations given to us, the other terms and conditions of the aforesaid loan are prima facie not prejudicial to the interest of the Company. (c) The company has repaid the principal amounts as stipulated. (vi) (v) (d) The Company has not taken any loan during the year. (iv) According to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets, sales of goods and services. We have not observed any continuing failure to correct major weaknesses in internal controls. (a) According to information and explanations given to us, we are of the opinion that the transactions made in pursuance of contracts or arrangements that needed to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered. (b) In our opinion and according to the information and explanations given to us, there are no transactions of purchase of goods & material and sale of goods, materials & services made in pursuance of contracts or arrangement required to be entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to Rs. 5,00,000/- or more in respect of each party. The Company has not accepted deposits from public hence directives issued by the Reserve Bank of India and the provisions of section 58A and 58 AA or any other relevant provisions of the Companies Act, 1956 and rules framed there under are not applicable for the year under audit. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
(vii)
(viii) The Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of activities carried on by the Company. Hence the provisions of clause 4 (viii) of the Companies (Auditor's Repor t) Order, 2003 are not applicable to the Company. (ix) (a) According to the records of the Company, the Company has been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Investor Education Protection Fund, Income-tax, Sales-tax, Wealth tax, Service Tax, Custom Duty, Excise Duty and other statutory dues. There were no dues on account of Cess under section 441A of the Companies Act, 1956 since the date from which the aforesaid section comes into force has no t yet been notified by the Central Government. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at March 31, 2007 for a period of more than six months from the date they became payable.
36
Reliance Capital Limited
ORS’ REPORT (Cont ontd...) ANNE XURE T O A UDI T ORS ’ REPOR T - (C ont d...) (c) According to the information and explanation given to us, there are no such statutory dues, which have not been deposited on account of any dispute, except in respect of sales tax under Gujarat Sales Tax Act, 1969 of Rs. 4,75,916 for the period 2001-02 which is pending before the Gujarat Sales Tax Tribunal, Ahmedabad and sales tax under Madhya Pradesh Sales Tax Ac t, 1969 of Rs. 4,30,472 for the period 1996-97 which is pending before the Appellate Deputy Commissioner of the Commercial Tax, Indore Division - I . (x) The Company neither has accumulated losses nor it has incurred any cash losses during the current financial year and in the immediately preceding financial year. Based on our audit procedures and the information and explanation given by management, we are of the opinion that the Company has no t defaulted in repayment of dues to a financial institution, bank or debenture holders. In our opinion and according to the information and explanations given to us, adequate documents and records have been maintained by the Company in respect of loans and advances granted on the basis of security by way of pledge of shares, debentures and other securities. of the guarantees given by the Company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company. (xvi) According to the information and explanation given to us the Company has not obtained any term loans. (xvii) According to information and explanation given to us and on an overall examination of the Balance Sheet of the Company as at March 31, 2007, no funds raised on shor t-term basis have been used for long-term investment. (xviii) During the year the Company has not made any preferential allotment of equity shares to a Company, covered in the register maintained under section 301 of the Companies Act, 1956, at price which is prejudicial to the interest of the Company. (xix) The Company did not have any debentures outstanding as on March 31, 2007 and has not defaulted in the creation of security or charge for debentures, issued and redeemed during the year. (xx) The Company has not raised any money by way of public issue during the year. (xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year. For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768
(xi)
(xii)
(xiii) In our opinion, the Company is not a chit fund, a nidhi or a mutual benefit society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company. (xiv) The Company has maintained proper records of transactions and contracts in respect of trading in shares, debentures, and other investment and timely entries have been made therein. (xv) According to the information and explanations given by the management, in our opinion the terms and conditions
37
Reliance Capital Limited
BAL ANCE SHEET AS AT MARCH 31, 2007 (Rs. in crore) SCHEDULE SOURCES OF FUNDS Shareholder Funds eholders Shareholders’ Funds (a) Share Capital (b) Equity Warrants Issued & Subscribed (Refer Note No. 2 of Schedule “A”) (c) Reserves & Surplus Funds Loan Funds (a) Secured Loans (b) Unsecured Loans Deferred Tax Liability (Refer Note No. 13 of Schedule “M”) TOTAL APPLIC TION ICA FUNDS: APPL ICATION OF FUNDS: Fixed Assets (a) Gross Block (b) Less: Depreciation (c) Lease Adjustment A/c (d) Net Block (e) Capital Work-in-Progress Investments urrent sset Loans ets, Advances Current A ssets, Loans & Advances (a) Stock in Trade (b) Sundry Debtors (c) Bank Balances (d) Other Current Assets (e) Loans & Advances F G 0.82 254.15 174.95 139.41 3 675.75 4 245.08 Curr urrent Pr Less: Current Liabilities & Provisions (a) Current Liabilities (b) Provisions Curr urrent sset ets Net Current A sset s TOTAL Accounting Policies L H 96.22 108.72 204.94 4 040.14 6 573.19 17.47 85.26 102.73 1 952.25 4 364.35 E 298.63 214.52 84.11 14.60 98.71 2 434.34 6.19 43.02 186.95 614.26 1 204.56 2 054.98 375.71 240.08 32.72 168.35 13.13 181.48 2 230.62 A 246.16 4 915.07 5 161.23 C D 145.00 1 257.96 1 402.96 9.00 6 573.19 167.50 74.39 241.89 4 364.35 223.40 49.48 3 849.58 4 122.46 As at March 31, 2007 As at March 31, 2006
B
Notes on Accounts M Schedules referred to above, form an integral part of the Balance Sheet. As per our report of even date For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768 For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain Mohan V. R. Mohan
38
Reliance Capital Limited
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2007 (Rs. in crore) SCHEDULE INCOME Operating & Other Income EXPENDITURE Interest & Finance Charges Administrative & Other Expenses Depreciation J K 42.63 100.98 7.07 150.68 PROFIT BEFORE PROFI T BEFORE TAX Provision for Current Taxation Provision for Fringe Benefit Tax Provision for Deferred Tax PROFIT PROFI T AFTER TAX Balance Brought Forward Excess Provision for Dividend (Include Dividend Tax) Reversal (Refer Note No. 3 (d) of Schedule "M") Profit available for appropriation ofit availabl for appropriation able APPROPRIATI TIONS APPROPRIATIONS Proposed Dividend - Equity Shares Corporate Dividend Tax Transfer to Statutory Reserve Fund Transfer to General Reserve Balance Carried to Balance Sheet 85.97 14.61 129.24 64.62 873.36 1 167.80 Basic Earning per Equity Share of Rs. 10 each ( Rs.) Diluted Earning per Equity Share of Rs. 10 each (Rs.) (Refer Note No. 12 of Schedule "M") Accounting Policies L 28.39 28.39 71.32 10.00 107.53 53.77 499.69 742.31 29.74 24.64 1 167.80 742.31 733.18 77.37 0.63 9.00 646.18 499.69 21.93 45.20 33.02 23.19 101.41 550.61 12.81 0.19 537.61 204.70 I 883.86 652.02 2006-07 2005-06
Notes on Accounts M Schedules referred to above, form an integral part of the Profit and Loss Account.
As per our report of even date For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768
For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain Mohan V. R. Mohan
39
Reliance Capital Limited
FORMING PAR ART SCHEDULE S F ORMING P AR T OF THE BAL ANCE SHEET AS A T MARCH 31, 2007 (Rs. in crore) As at March 31, 2007 SCHEDULE “A” CAPI APIT SHARE CAPITAL Authorised: 30 00 00 000 Equity Shares of Rs. 10 each (30 00 00 000) 10 00 00 000 Preference Shares of Rs. 10 each (10 00 00 000) 300.00 100.00 300.00 100.00 As at March 31, 2006
400.00 Issued and Subscribed 24 69 77 006 Equity Shares of Rs. 10 each (22 42 10 451) Add : Shares issued on conversion of Equity warrants - 2 17 00 000 of Rs. 10 each (Previous Year Nil) (Refer Note No. 2 below) Add : Shares issued and allotted pursuant to to the Scheme of Amalgamation 6 11 56 521 of Rs. 10 each (Previous Year Nil) (Refer Note. 3 (c) (ii) of Schedule "M") Less: Shares cancelled as per the Scheme of Amalgamation as approved by the Hon'ble High Court - 6 00 89 966 of Rs. 10 each (Previous Year Nil) (Refer Note. 3 (c) (iii) of Schedule "M")
400.00
224.21 21.70
224.21 -
61.16
-
60.09
-
246.98 Paid up 24 56 32 800 Equity Shares of Rs. 10 each (22 28 66 245) Add: Forfeited Shares (Amount originally paid up on 13 44 206 Equity Shares of Rs. 10 each (Previous Year 13 44 206)
224.21
245.63 0.53
222.87 0.53
246.16 246.16
223.40 223.40
NOTES: 1 Of the above Equity Shares: i) 29 36 555 equity shares (Previous year 18 70 000) were allotted as fully paid-up pursuant to the scheme of amalgamation and arrangement without payment being received in cash. ii) 6 11 56 521 equity shares were allotted to the shareholders of Reliance Capital Ventures Ltd. pursuant to the scheme of amalgamation and arrangement sanctioned by the Hon'ble High Court of Gujarat at Ahmedabad and the Hon'ble High Court of Judicature at Bombay. iii) 6 00 89 966 equity shares held by Reliance Capital Ventures Ltd. pursuant to the scheme of amalgamation and arrangement sanctioned by the Hon'ble High Court of Gujarat at Ahmedabad and the Hon'ble High Court of Judicature at Bombay were cancelled. iv) 12 63 89 839 equity shares are held by AAA Enterprises Pvt. Ltd., the holding company. v) 5 76 450 equity shares are held by Reliance Innoventures Pvt. Ltd. (Formerly Reliance Innoventures Ltd.), the Ultimate Parent Company. 2 The Company has allotted 2 17 00 000 equity shares of Rs. 10 each at a price of Rs. 228 per share on Januray 30, 2007, pursuant to the exercise of option by AAA Enterprises Pvt. Ltd. for conversion of equal number of warrants to equity shares.
40
Reliance Capital Limited
FORMING PAR SCHEDULE S F ORMING P AR T OF THE BAL ANCE SHEET AS A T MARCH 31, 2007 (Rs. in crore) As at March 31, 2007 SCHEDULE “B” RESERVES AND SURPLUS Capital Reserve As per last Balance Sheet Add: Amount transferred on Amalgmation (Refer Note No. 3 (c ) (v) of Schedule "M") Capital Redemption Reserve As per last Balance Sheet Securities Premium Account As per last Balance Sheet Add: Premium on Issue of Shares Statutor Reserv Fund atutory eser Statutor y Reserve Fund * As per last Balance Sheet Add: Amount transferred from Profit & Loss Account General Reserve As per last Balance Sheet Add: Amount transferred on Amalgmation (Refer Note No. 3 (c) (v) of Schedule "M") Add: Amount transferred from Profit & Loss Account As at March 31, 2006
6.38 0.05 6.43 10.13 2 817.90 473.06 3 290.96 287.23 129.24 416.47 228.25 24.85 64.62 317.72
6.38 6.38 10.13 734.69 2 083.21 2 817.90 179.70 107.53 287.23 174.48 53.77 228.25 499.69 3 849.58
Profit & Loss Account * Created pursuant to Reserve Bank of India (Amendment) Act, 1997. SCHEDULE “C” SECURED LOANS From Banks
873.36 4 915.07
145.00 145.00
167.50 167.50
NOTE: 1 The above loan is secured against the pledge of Fixed Deposits. 2 Amount payable within one year is Rs. 145.00 crore (Previous Year Rs. 167.50 crore). SCHEDULE “D” UNSECURED LOANS From Bodies Corporate Security Deposit Received - Lease Commercial Papers
408.20 1.60 848.16 1 257.96
74.39 74.39
NOTE: 1 Amount payable within one year 2 In respect of Commercial Papers a. Commercial Paper amounting b. Commercial Paper amounting c. Commercial Paper amounting d. Commercial Paper amounting e. Commercial Paper amounting
is Rs. 1.60 crore (Previous Year Rs. 14.39 crore). (at Face Value): to Rs. 105 crore, maturing on May 14, 2007. to Rs. 75 crore, maturing on May 16, 2007. to Rs. 160 crore, maturing on June 8, 2007. to Rs. 375 crore, maturing on June 28, 2007. to Rs. 150 crore, maturing on May 28, 2007.
41
Reliance Capital Limited
42
1 2 3 4 6
FORMING PAR ART SCHEDULES F ORMING P AR T OF THE BAL ANCE SHEET AS AT MARCH 31, 2007
SCHEDULE “E” FIXED ASSETS
Gross Block Additi./ Dedu./ Adj. Adj. Rs. Rs. 1.03 2.26 12.54 4.47 5.86 26.16 2.55 2.55 28.71 1.37 105.79 105.79 105.79 166.91 Depreciation For the AddiYear -tions Rs. Rs. 0.33 0.33 2.97 0.28 1.47 1.10 0.45 6.27 0.47 0.47 7.07 23.19 0.46 0.46 0.46 Lease Adju. 31-3-07 Rs. 32.72 (Rs. in crore) Net Block As at As at 31-3-06 31-3-07 Rs. Rs. 56.49 2.90 13.12 4.10 5.42 82.03 2.08 2.08 84.11 168.35 14.60 14.60 13.13 13.13 12.30 93.46 105.76 58.89 0.92 2.05 0.73 62.59 168.35
DESCRIPTION
As at 1-4-06 Rs. 139.42 105.79 245.21 119.78 3.83 5.96 0.93 130.50 375.71 541.25
As at 31-3-07 Rs. 139.42 139.42 120.81 6.09 18.50 5.40 5.86 156.66 2.55 2.55 298.63 375.71
Up to 1-4-06 Rs. 139.09 33.08 172.17 60.89 2.91 3.91 0.20 67.91 240.08 307.39
Dedu-ctions Rs. 33.08 33.08 33.08 90.50
Up to 31-3-07 Rs. 139.42 139.42 64.32 3.19 5.38 1.30 0.45 74.63 0.47 0.47 214.52 240.08
ASSETS ON LEASE Plant and Machinery Aircraft # Sub - total ASSETS FOR OWN USE Buildings Furniture and Fittings Office and Other Equipments Motor Vehicles Lease Hold Improvement Sub - total INTANGIBLE ASSETS Computer Software * Sub - total Grand Total Previous Year CAPITAL WORK-IN-PROGRESS Assets For Own use Total NOTES:
Buildings include : (i) cost of shares in Co-operative Societies Rs. 2 500 (Previous Year Rs. 2 500). (ii) Rs. 92.94 crore (Previous Year Rs. 92.94 crore) incurred towards purchase / acquisition of 1 31 881 equity shares of Re. 1 each of Mature Trading and Investments Pvt. Ltd. with a right of occupancy of certain area of commercial premises. Addition to gross block of buildings and accumulated depreciation thereon includes Rs. 1.03 crore and Rs. 0.46 crore pursuant to merger of Reliance Capital Ventures Ltd. with the company on July 17, 2006. Capital Work-in-progress includes: a) Rs. 13.05 crore (Previous Year Rs. 13.05 crore) incurred towards purchase / acquisition of 50 000 equity shares of Rs. 10 each of Legend Housing Pvt. Ltd. with a right of occupancy of certain area in a commercial / residential premise under construction. b) Rs. 1.55 crore (Previous Year Rs. 0.08 crore) advance against capital expenditure. * Remaining useful life of intangible assets is 4 years and other than internally generated. # Refer Note no. 1 of Schedule “G”.
Reliance Capital Limited
FORMING PAR ART SCHEDULE S F ORMING P AR T OF THE BAL ANCE SHEET AS AT MARCH 31, 2007 Quantity ace alue Face Value / Issue Price SCHEDULE “F” INVE MENTS VES IN VE STMENTS INVE MENTS VES LONG TERM INVE STMENTS Government and Other Securities Unquoted National Saving Certificates (Rs. 45 000, Previous Year Rs. 45 000) (Deposited with Sales Tax Department) PSU Bonds - Unquoted (Government Guaranteed) 13% Gujarat State Road Transport Corporation Ltd. (Previous Year Rs. 40 000) Other Investments quity Shares Quot Ful Paid ull Equity Shares - Quoted, Fully Paid Up Adlabs Films Ltd. Axsys Health Tech Ltd. Celebrity Fashions Ltd. Entertainment Net Work (India) Ltd. Global Broadcast News Ltd. Infrastructure Devlopment Finance Corp. Ltd. INOX Leisure Ltd. Jyoti Structure Ltd. Kinetic Engeering Ltd. Mahanagar Telephone Nigam Ltd. Prime Focus Ltd. Reliance Capital Ventures Ltd. Reliance Communications Ltd. (Company under same management) Reliance Energy Ltd. Reliance Energy Ventures Ltd. Reliance Industrial Infrastrucutre Ltd. Reliance Industries Ltd. Reliance Natural Resources Ltd. (Company under same management) Shri Laxmi Cotsyn Ltd. Spanco Telesystems & Solutions Ltd. Sparsh BPO Services Ltd. TV Today Network Ltd. Ventura Textiles Ltd. 40 000 – 100 – – 0.40 0.40 – – – – As at 31-3-2007 As at 31-3-2006 As at 31-3-2007 (Rs. in crore) Value As at 31-3-2006
5 10 10 10 10 2 10 10 10 10 10 10 5 10 10 10 10 5 10 10 10 5 1
000 000 373 000 000 000 012 000 000 575 000 – 1 84 40 295 1 32 30 433 – 1 60 100 93 55 295 1 64 71 295 13 23 11 69 5 15 00 66 83 18 00 000 666 333 327 000
12 13 11 1 18 1 00 16 38 7 50 15
55 25 58 23 00 00 33 00 15 00 00
12 55 000 13 25 000 10 50 000 – – – 5 00 000 – 7 15 000 – 15 00 000 1 64 71 295 1 79 40 295 1 19 95 1 64 71 1 60 1 34 60 1 64 71 089 295 100 295 295
12.45 7.95 14.51 3.77 84.45 71.95 23.72 43.92 12.73 82.88 26.29 – 209.05 323.26 – 0.50 114.69 2.72 16.77 21.51 10.76 88.45 5.92 1,178.25
12.45 7.95 12.24 – – – 8.12 12.73 – 26.29 5.05 193.54 294.92 28.35 0.50 165.02 2.72 16.77 32.27 – – – 818.92
13 00 000 35 50 000 – – –
quity Shares Unquot Ful Paid ull Equity Shares - Unquo ted, Fully Paid Up Ammolite Holdings Ltd. (Rs. 45 332, Previous Year Rs. 45 332) DTDC Courier & Cargo Ltd. DTDC Worldwide Express Ltd.
$1 10 10
1 000 13 74 312 -
1 000 14 34 312 2 24 900
66.86 -
69.78 0.22
43
Reliance Capital Limited
FORMING PAR ART SCHEDULE S F ORMING P AR T OF THE BAL ANCE SHEET AS AT MARCH 31, 2007 Quantity ace alue Face Value / Issue Price (Cont ontd.) SCHEDULE “F” (Contd.) Gini & Jony Apparel Pvt. Ltd. KLT Automotive & Tubular Products Ltd. Menon and Menon Pvt. Ltd. Observer (India) Ltd. Reliable Internet Ltd. Reliance Asset Reconstruction Co. Ltd. Reliance Land Pvt. Ltd. Reliance Life Insurance Co. Ltd. Reliance Net Ltd. Reliance Share & Stock Brokers Pvt. Ltd. Southern Wind Farms Ltd. Textrade International Pvt..Ltd. Virtual Marketing India Pvt. Ltd. Viscount Management Services (Alpha) Ltd. Viscount Management Services Ltd. WorldTel Holding Ltd. eference Shares Unquot erenc Ful Paid ull Preference Shares - Unquoted, Fully Paid Up 12% Redeemable Optionally Convertible Preference Shares of BLR India Pvt. Ltd. 100 7.5% Non- Cumulative Redeemable Preference Shares of Kinetic Engineering Ltd. 10 12% Cumulative Redeemable Preference Shares of Reliance Share & Stock Brokers Pvt. Ltd. 100 8% Cumulative Redeemable Preference Shares of Reliance Land Pvt. Ltd. 10 10% Cumulative Redeemable Preference Shares of Reliance Securities Ltd. 10 Series A - Yatra Online Inc. $0.0001 15 30 000 1 50 00 000 4 00 000 50 00 000 61 00 000 42 00 042 – 1 50 00 000 4 00 000 – – 42 00 042 15.30 15.00 4.00 5.00 61.00 6.20 360.72 Debentur ures Unquot Ful Paid ull Debentures - Unquoted , Fully Paid Up 11% Optionally Fully Convertible Debentures Series A - Ventura Textiles Ltd. 50 00 000 12% Optionally Fully Convertible Debentures Series B - Ventura Textiles Ltd. 50 00 000 INVE MENTS VES IN VE ST MENTS ero Coupon Con ertibl onv tible Zero Coupon Conver tible Unsecured Debentures of Viscount Management Services Ltd. Viscount Management Services (Alpha) Ltd. Deep Discount Bonds Secure Unquot Ful Paid ull Secured, Unquoted , Fully Paid Up Kothari Sugars & Chemicals Ltd. Reliable Internet Services Ltd. Reliance Communications Infrastructure Ltd. – 15.00 4.00 – – 6.20 195.95 10 20 00 000 10 5 25 000 10 5 22 000 10 23 200 10 10 12 30 000 10 50 00 000 10 10 62 40 000 10 3 55 000 10 50 00 000 10 22 18 720 10 4 54 739 10 – 10 18 000 10 10 800 8 14 295 $0.05 20 00 000 5 25 000 23 200 10 00 000 50 00 000 5 29 60 000 3 55 000 50 00 000 – – 6 26 000 50 000 30 000 8 14 295 10.70 11.29 8.09 0.02 1.23 5.00 85.00 0.36 5.00 7.99 30.00 – 0.02 0.01 22.65 10.70 11.29 0.02 1.00 5.00 31.72 0.36 5.00 – – 12.93 0.05 0.03 22.65 As at 31-3-2007 As at 31-3-2006 As at 31-3-2007 (Rs. in crore) Value As at 31-3-2006
20 22
– –
10.00 11.00
– –
1 000 1 000
22 90 630 31 86 710
10 91 830 15 87 810
197.84 261.01
77.96 101.17
10 10 10
– – –
6 20 000 13 752 3 21 190
– – – 479.85
3.62 113.54 803.94 1,100.23
Subsidiar Companies sidiary Subsidiary Companies quity Shares Unquot Ful Paid ull Equity Shares - Unquoted, Fully Paid up Reliance General Insurance Company Ltd. Travelmate Services (India) Pvt. Ltd.
10 10 30 72 127 10 1 38 13 140
7 65 00 525 –
207.00 24.95
76.50 –
44
Reliance Capital Limited
FORMING PAR ART SCHEDULE S F ORMING P AR T OF THE BAL ANCE SHEET AS AT MARCH 31, 2007 Quantity ace alue Face Value / Issue Price (Cont ontd.) SCHEDULE “F” (Contd.) Reliance Capital Asset Management Ltd. Medybiz Pvt. Ltd. Reliance Gilts Ltd. Reliance Capital Trustee Co. Ltd. Reliance Capital Research Pvt. Ltd. Reliance Technology Ventures Pvt. Ltd. Reliance Venture Asset Managament Pvt. Ltd. Net Logistics Pvt. Ltd. eference Shares Unquot erenc Ful Paid ull Preference Shares - Unquoted, Fully Paid Up 5% Cumulative Redeemable Preference Shares of Reliance Capital Asset Management Ltd. arrant ants Unquot Par art Paid Warrant s - Unquote d, Par tly Paid Up BLR India Pvt. Ltd. Kinetic Engineering Ltd. Kinetic Engineering Ltd. Southern Wind Farms Ltd. Textrade International Pvt. Ltd. Rs. 10 10 10 10 10 10 10 10 75 00 700 24 73 000 20 00 700 50 700 10 000 10 000 10 000 9 000 75 00 700 – 15 00 525 50 700 – – – – As at 31-3-2007 As at 31-3-2006 As at 31-3-2007 Rs. 7.50 4.33 2.00 0.05 0.01 0.01 0.01 0.42 (Rs. in crore) Value As at 31-3-2006 Rs. 7.50 – 1.50 0.05 – – – –
100
3 50 000
3 50 000
3.50 249.78
3.50 89.05 – 1.07 1.07 25.00 – 25.00 – – 2 230.62
Note 6 18 18 10 Note 6
15 90 200 – 6 00 000 5 50 00 000 60 985
– 6 00 000 – – –
– – 9.27 0.46 – 9.73
utual Fund Unquot Ful Paid ull Mutual Fund - Unquoted, Fully Paid Up Reliance Mutual Fund - Banking Fund The India Seed Investment Trust
10 10
– 500
75 84 952 –
– 2.00 2.00
Share Par tnership Firm artner Share in Par tnership Firm Reliance Capital Partners
–
–
–
154.01 154.01 154.01
LONG INV ES MENTS T O TA L L ONG TERM IN V E S T MENT S NOTES: 1 The aggregate value of investments: Rs. Quoted Unquoted 2 As at March 31, 2007 Market Value alue arket alue Book Value Rs. Rs. 1 178.25 3 400.84 1 256.09 –
2 434.34
As at March 31, 2006 Book Value Market Value Rs. 818.92 2 727.32 1 411.70 –
3
4
5 6
In terms of the scheme of demerger of Spanco Telesystems & Solutions Ltd.: a) the Company has been allotted 23 66 666 shares of Spanco Telesystems & Solutions Ltd. and 11 83 333 shares of Sparsh BPO Services Ltd. b) the above shares have been valued at 66.66% and 33.33% respectively of the cost of Spanco Telesystems & Solutions Ltd. and of Sparsh BPO Services Ltd. In terms of the scheme of merger of Reliance Energy Ventures Ltd. with Reliance Energy Ltd. a) the Company has been allotted 12 35 344 shares of Reliance Energy Ltd. b) the above shares have been valued at the cost of Reliance Energy Ventures Ltd. In terms of the scheme of merger of Reliance Capital Ventures Ltd. with Reliance Capital Ltd. a) the Company has received 2 55 00 175 shares of Reliance General Insurance Company Ltd. amounting Rs. 25.50 crore. b) the Company has received 5 00 175 shares of Reliance Gilts Ltd. amounting Rs. 0.50 crore. The above includes Rs. 1.84 crore (Previous Year Rs. 1.84 crore) of shares pledged towards security on behalf of third parties. The Company has been allotted warrants without paying any consideration at the time of allotment.
45
Reliance Capital Limited
FORMING PAR ART SCHEDULE S F ORMING P AR T OF THE BAL ANCE SHEET AS AT MARCH 31, 2007 (Rs. in crore) As at March 31, 2007 SCHEDULE “G” CURRENT ASSETS, LOANS AND ADVANCES CURRENT ASSETS Stock in Trade Sundry Debtors (Unsecured) Debts outstanding for a period exceeding six months Other Debts, considered good Balances with the Scheduled Banks In Current Accounts In Fixed Deposit Accounts (Refer Note No. 1 of schedule “C”) Other Current Assets Income accrued on investments Assets held for Sale (Refer Note No. 1 below) Receivables for Assets on Lease 0.82 – 254.15 254.15 9.80 165.15 174.95 45.94 93.46 0.01 139.41 569.33 LOANS & ADVANCES Loan to Others Considered Doubtful Portfolio Assignement Considered Good Advances recoverable in Cash or in kind or for value to be received. Considered Doubtful Considered Good Deposits Taxes Paid (Net) 612.58 – 1.68 614.26 850.42 11.95 175.00 186.95 – 43.02 43.02 6.19 As at March 31, 2006
3.00 133.13 3 409.62 3 545.75
3.15 1 123.36 1 126.51
– 96.18 96.18 16.51 17.31 33.82 3 675.75
17.06 17.06 6.65 54.34 60.99 1 204.56
NOTES: 1 Assets held for sale, represents Aircraft, at written down value as on April 1, 2006 that was previously classified as a fixed asset. 2 Loan to others include Rs. 5.00 crore (Previous Year Rs. 2.00 crore) due from subsidiary companies. 3 Advances recoverable in cash or in kind includes Rs. Nil (Previous Year Rs. 0.02 crore) due from the Reliance Capital Ventures Ltd. (Maximum balance outstanding at any time during the year Rs. Nil (Previous Year Rs. 0.02 crore)) a company under same management. 4 Advances recoverable in cash or in kind includes Rs. 57.52 crore (Previous Year Rs. 8.09 crore) paid towards share application money pending allotment. 5 Advances recoverable in cash or in kind includes Rs. 0.05 crore due from the Manager / Officer (Previous Year Rs. 0.05 crore) (Maximum balance outstanding at any time during the year Rs. 0.05 crore (Previous Year Rs. 0.05 crore)). 6 In the opinion of the Management, Loans and Advances, other than doubtful, are considered as good and fully recoverable. A provision for Non Performing advances of Rs. 4.50 crore (Previous Year Rs. 3.15 crore) is made in accounts in accordance with Prudential Norms prescribed by the Reserve Bank of India for Non-Banking Financial Companies. 7 Advances recoverable in cash or kind inculde an amount Rs. 15 crore (Previous Year Rs. Nil) considered to be a non performing asset for which adequate provision has been made in accordance with RBI Prudential Norms.
46
Reliance Capital Limited
FORMING PAR ART SCHEDULE S F ORMING PAR T OF THE BAL ANCE SHEET AS AT MARCH 31, 2007 (Rs. in crore) As at March 31, 2007 SCHEDULE “H” CURRENT LIABILITIES AND PROVISIONS CURRENT LIABILITIES Sundry Creditors (Other than SSI) Other Liabilities Interest accrued but not due Investor Education and Protection Fund Unclaimed Dividend Unclaimed Fixed Deposit PROVISIONS Provision for Wealth Tax (Net) Provision for Non Performing Assets Provision for Leave Encashment Provision for Gratuity Proposed Dividend on Shares Provision for Corporate Dividend Tax As at March 31, 2006
1.54 88.11 1.69 4.78 0.10 96.22 0.23 4.50 1.84 1.57 85.97 14.61 108.72 204.94
7.17 5.00 – 5.11 0.19 17.47 0.09 3.15 0.70 – 71.32 10.00 85.26 102.73
NOTES:
1) 2)
Investor Education and Protection Fund does not include any amounts, due and outstanding, to be deposited to said fund. Based on the information available with the company, there are no dues outstanding for a period exceeding 30 days as at March 31, 2007 (Previous Year Rs. Nil) in respect of small scale industries, as defined under clause (j) of section 3 of the Industries (Development and Regulation) Act, 1951.
SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2007 2006-07 SCHEDULE “I” OPERATING OTHER INCOME OPERATING & OTHER INCOME Lease Rentals Less: Lease Equalisation (Net) Lease Finance Charges Dividend on: Long Term Investments Stock in Trade Interest and Finance Income on: Long Term Investments (Tax deducted at source Rs. 15.30 crore, Previous year Rs. 0.48 crore) Others (Tax deducted at source Rs. 13.75 crore, Previous year Rs. 2.53 crore) Profit on sale of (Net): Long Term Investments Stock in Trade (Rs. in crore) 2005-06
12.31 11.97 0.34 0.01 34.53 0.46 34.99 203.32
43.61 23.35 20.26 0.24 7.14 10.05 17.19 142.45
115.28
12.32
318.60 501.79 13.62 515.41 411.47 43.53
154.77
455.00
47
Reliance Capital Limited
SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2007 (Rs. in crore) 2006-07 (Cont ontd.) SCHEDULE “I” (Contd.) Profit Share on partnership Firm (Refer Note No. 6 of Schedule "M") Commitment Charges Profit on Sale of Fixed Assets Profit on Securities Option Trading Bad Debts Recovered Credit Balance written Back Rent Miscellaneous Income 1.78 1.07 – 5.68 0.01 0.18 5.75 0.04 883.86 SCHEDULE “J” INTERES CHARGES INTEREST & FINANCE CHARGES Interest Debentures On Others 2.20 40.43 42.63 SCHEDULE “K” ADMINISTRATIVE TRATI OTHER EXPENSE XPENSES ADMINISTRATIVE AND OTHER EXPENSE S Payments to and provisions for employees: Salary, Bonus etc. Contribution to Provident Fund & other funds Staff Welfare & Other Amenities Rent Rates and Taxes Repairs and Maintenance Buildings Others Electricity Insurance Travelling and Conveyance Postage, Telegram and Telephones Professional Fees Loss on Securities Option Trading Loss on Securities & Commodities Futures Trading Auditor's Remuneration (Refer Note No. 7 of Schedule "M") Donation Directors' Sitting Fees Balances Written Off (Net) Provision for Non Performing Assets (Net) Miscellaneous Expenses – 45.20 45.20 2005-06 – – 1.26 – 0.90 2.14 0.26 652.02
25.73 3.62 15.95 45.30 6.05 0.40 0.70 1.41 0.26 0.26 2.67 4.27 7.82 – 1.46 0.45 0.06 0.04 1.07 1.35 27.41 55.68 100.98
6.63 0.50 3.19 10.32 0.57 0.08 0.23 1.03 – 0.07 0.89 1.72 10.94 0.04 0.43 0.23 0.08 0.06 0.20 0.15 5.98 22.70 33.02
48
Reliance Capital Limited
ACCOUNTING POLICIES “L” SCHEDULE “L” ACCOUNTING POLICIES A. Basis of Preparation of Financial Statements The financial statements have been prepared under the historical cost convention method, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, as adopted consistently by the Company. B. Use of Estimates The preparation of financial statement is in conformity with Generally Accepted Accounting Principles (GAAP) and requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual result could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. C. Revenue Recognition i) Interest Income: Interest Income is recognised in the profit and loss account as it accrues except in the case of non performing assets ("NPAs") where it is recognised, upon realization, as per the prudential norms of RBI. Dividend Income: Dividend income is recognised when the right to receive payment is established.
ii)
iii) Lease Finance: Income from leased assets is accounted for in the year in which lease rentals fall due, by applying the interest rate implicit in the lease to the net investment in the lease during the period. iv) Discount on Investments: The difference between the acquisition cost and face value of debt instruments is recognized as interest income over the tenor of the instrument. v) Redemption premium on Investments in Preference Shares: Redemption premium on investments in Preference shares is recognised as income over the tenor of the investment. D. Own Fixed Assets All fixed assets are stated at cost less accumulated depreciation after considering Lease Adjustment account. All costs including financing cost attributable to fixed assets till assets are ready for intended use are capitalised. E. Assets given on Finance Lease i) All assets given on finance lease on or before March 31, 2001 are capitalised as Fixed Assets. All assets given on finance lease on or after April 1, 2001 are shown as receivables at an amount equal to net investment in the lease. Initial direct costs in respect of leases are expensed in the year in which such costs are incurred.
ii) F.
Lease hold Improvements Lease hold improvements are written off over the lease period of the asset (Lease hold Premises).
G . Intangible Assets Intangible assets are stated at cost of acquisition less accumulated amortization. Intangible assets are amortised over their estimated useful lives on a straight line basis, commencing from the date the asset is available to the Company for its use. H. Depreciation Depreciation is provided as under: i) ii) Assets for own use: On Written Down Value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Leased Assets: On Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.
I.
Impairment of Assets An asset is treated as impaired, when carrying cost of assets exceeds its recoverable amount. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount.
49
Reliance Capital Limited
(Cont ontd...) A C C OUNTING POL ICIE S (C ont d...) J. Investments Investments are classified into current investments and long-term investments. Current investments are valued, scrip wise, at cost or fair value, whichever is lower. Long-term investments are valued at cost. Provision for diminution is made scrip wise to recognise a decline, other than temporary.
Stock trade sset ets for sal ale K. Stock in trade / Asset s held for sale Securities held as stock-in-trade are valued scrip wise at book value or fair value whichever is lower. Assets held for sale are valued at cost or market value whichever is lower. L. Share Issue Expenses Issue expenses are adjusted against the securities premium account. M . Employee Retirement Benefits Company's contribution to Provident Fund and Superannuation Fund are charged to Profit and Loss Account. Gratuity and Leave Encashment benefits are charged to Profit and Loss Account on the basis of actuarial valuation. oreign Currency ansac urrenc actions N . Foreign Currency Transac tions (a) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction. (b) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts has been recognised over the life of the contract. (c) Non monetary foreign currency items are carried at cost. (d) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets. Borro Cost osts O. Borrowing Cost s Borrowing costs, which are directly attributable to the acquisition/construction of fixed assets, till the time such assets are ready for intended use, are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred. Derivativ atives Commodit Hedging ansac ommodity actions P. Financial Derivatives and Commodity Hedging Transactions Financial derivatives and commodity hedging transaction are accounted for on a mark to market basis. Payments of margin requirements on these contracts are recognised on the balance sheet. Q. Provision for Current Tax, Deferred Tax and Fringe Benefit Tax for Curr urrent Deferr erre Fring Benefit ringe Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period) . The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised. Provision for Fringe Benefit Tax has been recognized on the basis of a harmonious, contractual interpretation of the Income Tax Act, 1961. R. Earning per share The basic earnings per share is computed by dividing the net profit / loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earning per share comprises the weighted average number of shares considered for deriving earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that reduce profit / loss per share are included. Conting ontingent Conting ontingent sset ets S. Provisions, Contingent Liabilities and Contingent A ssets Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.
50
Reliance Capital Limited
NOTES TO THE ACCOUNTS SCHEDULE “M” NOTES TO THE ACCOUNTS 1. Contingent Liabilities and Commitments (As certified by the management) (Rs. in crore) As at March 31 2007 CONTINGENT LIABILITIES : i) ii) Guarantees to Banks and Financial Institutions on behalf of third parties Claims against the Company not acknowledged as debt (Sales Tax / Income Tax) (The Income Tax Assessments have been completed upto Assessment Year 2004-05.) 56.06 69.62 As at March 31 2006
8.91
20.02
COMMITMENTS iii) Estimated amount of contracts remaining to be executed on capital account (net of advances) iv) Uncalled amount on investment
1.49 22.02
0.35 -
2. In respect of preferential allotment made on July 19, 2005 interalia, to AAA Enterprises Pvt. Ltd. 2 17 00 000 equity warrants were outstanding as on March 31, 2006 on which Rs. 22.80 per warrant was paid. The Company has allotted 2 17 00 000 equity shares of the face value of Rs. 10 each at a premium of Rs. 218 per share against conversion of warrants to equity shares as on January 30, 2007. The Company has received the balance Rs. 445.28 crore (Rs. 205.20 per share) and has utilised the same for general corporate purposes. This disclosure is made in compliance with clause 13.5A of SEBI (DIP) Guidelines 2000. 3. (a) In terms of the Scheme of Amalgamation & Arrangement (Scheme) approved by orders dated June 23, 2006 of Hon'ble High Court of Gujarat at Ahmedabad and June 22, 2006 of Hon'ble High Court of Judicature at Bombay, Reliance Capital Ventures Limited ("RCVL") - (whose core business is financial services) has been amalgamated with the Company with effect from July 17, 2006. (b) The amalgamation has been accounted for under the "Pooling of interest method" as prescribed by Accounting Standard 14 (AS-14) Accounting for Amalgamation issued by the Institute of Chartered Accountants of India. (c) In accordance with the said Scheme :
(i) All the assets (other than shares of the Company held by "RCVL") debts, liabilities, duties and obligations of "RCVL" have been vested in the Company with effect from July 17, 2006 and have been recorded at their respective book values under the pooling of interest method of accounting for amalgamation. There were no difference in the accounting policies of "RCVL" and the Company. (ii) 6 11 56 521 equity shares of Rs. 10 each have been allotted to the shareholders of "RCVL" in the ratio of 5 equity shares of Rs. 10 each of the Company for every 100 equity shares of Rs. 10 each of "RCVL". The Company's paid up capital has accordingly increased by Rs. 1.07 crore. These equity shares shall rank pari-passu with the existing equity shares of the Company. (iii) Investment in equity shares by “RCVL” in its books and 6 00 89 966 equity shares of the Company has been cancelled. (iv) In accordance with the said scheme, any excess / shortfall of the Net Assets Value taken over by the Company over the paid up value of equity shares to be issued and allotted has been transferred to General Reserve.
51
Reliance Capital Limited
NOTES TO THE ACCOUNTS (v) The computation of the amount transferred to General Reserve is as under: (Rs. in crore) Book Value of Assets - Fixed Assets - Investment - Net Current Assets Less : Accumulated Depriciation Less : Capital Reserve Book Value of Net Assets taken over - Less: equity shares issued to RCVL shareholders (6 11 56 521 equity shares of Rs. 10 each) - Less:Cancellation of Investment of RCVL in RCL 1.03 26.00 (0.60) 0.46 0.05 25.92
61.16 (60.09) 1.07
Amount credited to General Reserve on Amalgamation
24.85
(d) In view of the Amalgamation with "RCVL", "RCVL" has waived its entitlement, to receive dividend, in respect of its holding in 6 00 89 966 equity shares of Rs. 10 each of the Company, which has been cancelled in terms of the scheme. 4. Assets given on lease on or after April 1, 2001 i) articulars ticular Par ticulars To tal Not later than one year Later than one year and not later than five years (-) (-) (-) (-) (-)
(Rs. in crore) Later than five years
Future lease rentals receivables
(0.60)
(0.60) (1.10) (1.70) (0.02) (1.68)
(-) (-) (-) (-) (-)
Add: Unguaranteed residual value
(1.10)
Gross Investments in lease
(1.70)
Less: Unearned finance income
(0.02)
Present value of the minimum Lease Rentals receivable Figures in brackets represent previous year figures. ii) General description of lease arrangements:
(1.68)
a) Assets are generally given on lease for a period of five years. b) Lease rentals are charged on the basis of agreed rate of interest. 5. Managerial Remuneration i) The Company has been advised that the computation of net profits for the purpose of managerial remuneration under section 349 of the Companies Act, 1956 need not be enumerated, since no commission by way of percentage of profit is payable for the year to any of the Directors / Manager of the Company.
52
Reliance Capital Limited
NOTES TO THE ACCOUNTS ii) Payment to and provision for employees include Managerial Remuneration by way of: (Rs. in crore) articulars ticular Par ticul ar s i) ii) iii) Salaries Perquisites (Rs. 30 000, Previous Year Rs. 30 000) Contribution to Provident Fund and Superannuation Fund To tal * inclusive of arrears a) Information relating to payment to manager does not include payment for gratuity and leave encashment which is provided for group of employees on an overall basis. 6. In respect of Reliance Capital Partners ("Partnership Firm"), Rs. 1.78 crore profit of Reliance Capital Partners is considered as income of current financial year. The firm was constituted on April 19, 2006 and reconstituted on April 21, 2006. a) The firm consisted of following partners: i) Reliance Capital Ltd. (from April 19, 2006 to March 31, 2007) ii) Reliance Land Pvt. Ltd. (from April 19, 2006 to March 31, 2007) iii) Sonata Investments Ltd. (from April 19, 2006 to April 21, 2006) iv) Mr. Surendra Pipara (from April 21, 2006 to March 31, 2007) b) Profit Sharing Ratio : The profit is distributed between the partners on weighted average cost of capital 7. Auditors’ Remuneration includes: (Rs. in crore) articulars ticular Par ticulars i) ii) iii) iv) Audit Fees Tax Audit Fees Out of Pocket Expenses Certification Charges 2006-2007 0.42 0.00 0.00 0.03 2005-2006 0.17 0.05 0.01 0.00 2006-2007 0.20 0.05 0.25 2005-2006 0.12 0.02 *0.14
8. In March 2007 the Company purchased non performing loans aggregating to Rs. 11.61 crore. In accordance with the requirements of RBI circular: DBOD.NO.BP.BC.16/21.04.048/2005-06 the Company has classified these as standard assets. None of these accounts were restructured during the year and the aggregate outstanding as at March 31, 2007 was Rs. 11.61 crore. 9. Miscellaneous Expenses referred to in Schedule 'K' include: i) ii) Net Prior Period items Rs. 1.73 crore (net debit) (Previous year Rs. 0.04 crore (net credit)) Sales tax paid (net) Rs. 1 156 (Previous Year Rs. 5)
10. Segment reporting As per paragraph 4 of Accounting Standard (AS-17), on "Segment Reporting" issued by the Institute of Chartered Accountants of India, where a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment reporting needs to be presented only on the basis of consolidated financial statements. In view of this, segment information has been presented at Note no. 14 of Schedule 'N' of the attached Consolidated Financial Statements. 11. Related Party Disclosures List of related parties i) Promoters AAA Enterprises Pvt. Ltd. (Holding Company) - (w.e.f. February 22, 2007)* Reliance Innoventures Pvt. Ltd. (Formerly Reliance Innoventures Ltd.) (w.e.f. February 22, 2007) - (Ultimate Parent Company)
53
Reliance Capital Limited
NOTES TO THE ACCOUNTS Shri Anil D. Ambani Smt. Tina A. Ambani Smt. Kokilaben D. Ambani Master Jai Anmol A. Ambani Master Jai Anshul A. Ambani Hansadhwani Trading Co. Pvt. Ltd. ii) Subsidiaries Reliance Capital Asset Management Ltd. Reliance Capital Trustee Co. Ltd. Reliance General Insurance Company Ltd. Reliance Gilts Ltd. Reliance Venture Asset Management Pvt. Ltd. (w.e.f. October 3, 2006) Reliance Capital Research Pvt. Ltd. (w.e.f. February 20, 2007) Travelmate Services (India) Pvt. Ltd. (w.e.f. November 29, 2006) Medybiz Pvt. Ltd. (w.e.f. February 16, 2007) Net Logistics Pvt. Ltd. (w.e.f. February 16, 2007) Reliance Technology Ventures Pvt. Ltd. (w.e.f. February 23, 2007) Reliance Asset Management (Mauritius) Ltd. Reliance Asset Management (Singapore) Pte. Ltd. Reliance Capital Partners (Partnership Firm) (w.e.f. April 19, 2006) iii) Associates Reliance Land Pvt. Ltd. Reliance Share & Stock Brokers Pvt. Ltd. WorldTel Holding Ltd. Ammolite Holdings Ltd. Reliance Asset Reconstruction Co. Ltd. Viscount Management Services Ltd. (Ceased to be an Associate on March 28, 2007) Viscount Management Services (Alpha) Ltd. (Ceased to be an Associate on March 28, 2007) Reliance Life Insurance Co. Ltd. (Ceased to be an Associate on March 28, 2007) Reliance Capital Ventures Ltd. (Ceased to be an Associate on July 17, 2006) ell Subsidiaries iv) Fellow Subsidiaries Reliance Communications Ltd. (Formerly Reliance Communications Ventures Ltd)** Reliance Webstores Ltd. Reliance Communications Infrastructure Ltd.** Reliance Telecom Ltd.** Matrix Innovations Ltd. Gateway Systems (India) Ltd. Reliance Natural Resources Ltd.** v) Key Managerial Personnel Shri V. R. Mohan - Company Secretary & Manager
54
Reliance Capital Limited
NOTES TO THE ACCOUNTS vi) vi ) Transactions during the year with related parties: (Rs. in crore) articulars ticular Par ticulars Holding Subsidiaries company ell Fellow Subsidiaries Associates Key Management Personnel To tal
Equity Shares a) Issued /converted during the year 494.76 (-) (-) (-) (1 808.04) 494.76 (-) (1 808.04)
quity arrant ants Equity Warrants a) b) c) Issued during the year converted into shares Outstanding as at March 31, 2007 Unsecur ecure Loans fr Unsecured Loans from Bodies Corporate Corporate orporat a) b) Taken during the year Repaid during the year (-) (-) Leased Assets (Gross Block) a) b) Leased Assets sold during the year Assets on Lease as at March 31, 2007 (-) (-) (16.76) (-) (-) (-) (16.76) (-) (-) (1 240) (-) (-) (-) (1 240) (-) 49.48 (-) (-) (-) (-) (-) (-) (-) (-) (93.48) (-) (49.48) (-) (-) (-) (93.48) 49.48 (-) (49.48)
Investments a) b) c) d) e) f) Subscribed / Purchased during the year Investment in Partnership firm during the year Profit of Partnership firm during the year Sold / Redeemed during the year Brokerage paid during the year Balance as at March 31, 2007 Stock-in-trade a) b) c) Subscribed / Purchased during the year Redeemed / Sold during the year Brokerage paid during the year (-) (-) (-) (-) (2.00) 0.25 (1.07) (-) (-) (-) (-) (2.00) 0.25 (1.07) (-) (-) (-) (-) (-) (-) 109.77 (-) 152.23 (-) 1.78 (-) (-) (-) 403.79 (89.05) (-) (-) (-) 1 686.97 (-) (-) 211.70 (-) 285.95 (129.05) (-) (-) 0.05 (15.01) 0.83 (0.52) 42.89 (1 293.63) (-) (-) (-) (-) (-) 395.72 (129.05) 152.23 (-) 1.78 (-) 1 687.02 (15.01) 0.83 (0.52) 658.38
(-) (1 382.68)
55
Reliance Capital Limited
NOTES TO THE ACCOUNTS (Rs. in crore) articulars ticular Par ticulars Holding Subsidiaries company (-) (-) (-) 0.89 (-) (-) 5.26 (-) (-) ell Fellow Subsidiaries Associates Key Management Personnel (-) (-) (-) To tal
d)
Balance as at March 31, 2007
(-) 203.64 (0.04) (583.49)
(-) 209.79 (0.04) (583.49)
Sundry Debtors Balance as at March 31, 2007 Interest Accrued on Investments Balance as at March 31, 2007 eceivables for sset eivabl ets Lease Receivables for A sset s on Lease a) b) Repaid during the year Balance as at March 31, 2007 Loans to Others a) b) c) d) Given during the year Returned during the year Balance as at March 31, 2007 Interest Receivable on above
(-) (-)
(-) (-)
1.19 (-) (-)
(4.69) (1.68)
(-) (-)
1.19 (4.69) (1.68)
(-) (-) (-) (-)
3.00 (10.00) (10.00) 5.00 (2) 0.10 (-)
1548.45 (-) (-) 1548.45 (-) 4.67 (-)
584.19 (875.74) 592.59 (36.33) 838.21 (846.61) 6.15 (-)
(-) (-) (-) (-)
2135.64 (885.74) 592.59 (46.33) 2391.66 (848.61) 10.92 (-)
Advances recoverable in cash or in kind a) b) Given during the year Returned during the year Rs. 14 400. ( Previous year Rs. 20 864) c) d) Balance as at March 31, 2007 Interest receivable as at March 31, 2007
## #
(-) (-) (-) (-)
0.02 (-) (-) 0.02 (-) (-)
(-) (-) (-) (-)
(0.02) (-) (0.02) (-)
(-) ## (#) 0.04 (0.04) 0.01 (0.01)
0.02 (0.02) ## (#) 0.06 (0.06) 0.01 (0.01)
urrent Current Liabilities a) Sundry Creditors Balance as at March 31, 2007 (-) 1.54 (-) (-) (0.06) (-) 1.54 (0.06)
Income a) b) c) Lease Rentals Interest & Finance Income
###
(-) (-) (-)
(-) 0.10 (-) (-)
(-) 160.96 (-) (-)
(4.90) 62.42 (116.41) (0.02)
(-)
###
(4.90) 223.48 (116.41) (0.02)
Rs. 8 136
(-) (-)
Sale of Fixed Assets
56
Reliance Capital Limited
NOTES TO THE ACCOUNTS (Rs. in crore) articulars ticular Par ticulars Holding Subsidiaries company (-) e) Miscellaneous Income (-) Expenditure a) b) c) d) e) f) Interest on Others Rent Insurance Payments to and provisions for employees Professional fees Miscellaneous (-) (-) (-) (-) (-) (-) ontingent Liability Contingent Liability a) Guarantees to Banks and Financial Institutions on behalf of third parties (-) (-) 0.12 (-) 0.35 (32.85) (-) 0.47 (32.85) (-) (-) 0.09 (0.03) (-) (-) 0.22 (-) (-) 0.14 (-) (-) (-) 0.50 (-) 0.64 (-) (37.75) (0.06) (-) (-) (-) 0.00 (-) (-) (-) (-) 0.25 (0.13) (-) (-) (37.75) 0.14 (0.06) 0.09 (0.03) 0.25 (0.13) 0.50 (-) 0.86 (-) 1.34 (0.76) (-) ell Fellow Subsidiaries 4.41 (-) (-) Associates Key Management Personnel (-) (-) To tal
d)
Rent
(-) (0.08)
5.75 (0.76) (0.08)
*
AAA Enterprises Pvt. Ltd. which was an associate in the previous year is now the Holding Company w.e.f. February 22, 2007.
** Reliance Communication Infrastructure Ltd., Reliance Telecom Ltd., Reliance Communications Ltd. and Reliance Natural Resources Ltd. which were associates in the previous year, are now Fellow Subsidiary Companies. Note:1 2 3 4 Figures in bracket indicate previous year figures. Expenses incurred towards public utilities services such as telephone and electricity charges have not been considered for related party transaction. Previous year transactions with parties that have become related parties in the current year have been excluded in the above mentioned table as the relationship did not exist. In addition to the above, Director Sitting Fees of Rs. 40 000. (Previous Year Rs. 0.01 crore) has been paid to Shri Anil D. Ambani, an individual having significant influence.
Significant transactions with related parties: i) ii) iii) iv) v) Equity Shares includes Rs. 494.76 crore (Previous Year Rs. 1 808.04 crore) converted / issued to AAA Enterprises Pvt. Ltd. Equity Warrants of Rs. 49.48 crore held by AAA Enterprises Pvt. Ltd. have been converted to equity shares in current year at the rate of Rs. 228 per share (premium Rs. 218 per share) issued to AAA Enterprises Pvt. Ltd. Equity Warrants as at March 31, 2007 includes Rs. Nil (Previous Year Rs. 49.48 crore) outstanding warrants held by AAA Enterprises Pvt. Ltd. Unsecured Loans from Bodies Corporate includes Rs. Nil (Previous Year Rs. 1 240.00 crore) repaid to Reliance Communications Infrastructure Ltd. Leased Assets (Gross Block) includes Rs. Nil (Previous Year Rs. 16.76 crore) sold to Reliance Communications Infrastructure Ltd.
57
Reliance Capital Limited
NOTES TO THE ACCOUNTS vi) Investments purchased lying in subsidiaries includes Rs. 105.00 crore (Previous Year Rs. Nil) in shares of Reliance General Insurance Company Ltd., Rs. 152.23 crore investment in capital of Partnership Firm and Rs. 1.78 crore in profit of Partnership Firm. Investment purchased in associates Rs. 159.84 crore (Previous Year Rs. 54.72 crore) subscribed to debentures of Viscount Management Services (Alpha) Ltd. and Rs. 119.88 crore (Previous Year Rs. 52.75 crore) subscribed to debentures of Viscount Management Services Ltd. Investment sold lying in fellow subsidiaries, Rs. 1548.45 crore (Previous Year Rs. Nil) deep discount bonds to Reliance Communications Ltd. & Investment sold in associates comprise Rs. 0.03 crore (Previous Year Rs. Nil) in shares to Reliance Land Pvt. Ltd. and Rs. 0.02 crore (Previous Year Rs. Nil) in shares to Reliance Shares & Stock Brokers Pvt. Ltd. Investments lying in associates includes Rs. 0.83 crore (Previous Year Rs. 0.52 crore) brokerage paid to Reliance Share & Stock Brokers Pvt. Ltd. Investments as at March 31, 2007, lying in subsidiaries includes Rs. 207.00 crore (Previous Year Rs. 76.50 crore) in shares of Reliance General Insurance Company Ltd. and Rs. 154.01 crore in Reliance Capital Partners current account. Investments as at March 31, 2007, lying in fellow subsidiaries Rs. 323.26 crore (Previous Year Rs. 294.92 crore) in shares of Reliance Energy Ltd., Rs. 209.05 crore (Previous Year Rs. 193.54 crore) in shares of Reliance Communications Ltd. Rs. Nil (Previous Year Rs. 803.94 crore) in deep discount bonds of Reliance Communications Infrastructure Ltd. Investments as at March 31, 2007, lying in associates Rs. 10.00 crore (Previous Year Rs. 5.00 crore) in shares of Reliance Land Pvt. Ltd., Rs. 9.00 crore (Previous Year Rs. 9.00 crore) in shares of Reliance Share & Stock Brokers Pvt. Ltd., and Rs. 22.65 crore (Previous Year Rs. 22.65 crore) in shares of WorldTel Holding Ltd. Stock in Trade redeemed / sold Rs. Nil (Previous Year Rs. 2.00 crore) debentures by Reliance Land Pvt. Ltd. Stock in Trade includes Rs. 0.25 crore (Previous Year Rs. 1.07 crore) brokerage paid to Reliance Share & Stock Brokers Pvt. Ltd. Sundry Debtors as at March 31, 2007, lying in subsidiaries includes Rs. 0.71 crore (Previous Year Rs. Nil) due from Reliance General Insurance Company Ltd., Rs. 0.17 crore (Previous Year Rs. Nil) due from Reliance Capital Research Pvt. Ltd., lying in fellow subsidiaries Rs. 5.26 crore (Previous Year Rs. Nil) due from Reliance Communications Infrastructure Ltd. and lying in associates Rs. 203.61 (Previous Year Rs. 0.04 crore) due from Reliance Share and Stock Brokers Pvt. Ltd., Interest Accrued on Investment as at March 31, 2007 Rs. Nil (Previous Year Rs. 583.49 crore) due from Reliance Communications Infrastructure Ltd. Receivables for Assets on Lease includes Rs. 0.83 (Previous Year Rs.1.70 crore) repaid by Reliance Communications Infrastructure Ltd. and Rs. 0.36 crore (Previous Year Rs. 1.07 crore) repaid by Reliance Telecom Ltd. Receivables for Assets on Lease as at March 31, 2007 includes Rs. Nil (Previous Year Rs. 0.83 crore) receivable for assets leased to Reliance Communications Infrastructure Ltd. and Rs. Nil (Previous Year Rs. 0.36 crore) receivable for assets leased to Reliance Telecom Ltd. Loans to others lying in subsidiaries, includes Rs. 3.00 crore (Previous Year Rs. Nil) given to Medybiz Pvt. Ltd., Rs. Nil (Previous Year Rs. 10.00 crore) given to Reliance Gilts Ltd.. Loans to others lying in fellow subsidiaries, includes Rs. 1 548.45 crore (Previous Year Rs. Nil) given to Reliance Communications Infrastructure Ltd. Loans to others lying in associates, Rs. 497.16 crore (Previous Year Rs. 781.41 crore) given to Reliance Land Pvt. Ltd. and Rs. 60.00 crore (Previous Year Rs. 94.30 crore) given to Reliance Share & Stock Brokers Pvt. Ltd. Loans to others lying in subsidiaries, includes, Rs. Nil (Previous Year Rs. 10.00 crore) repaid by Reliance Gilts Ltd. Loans to others lying in associates, Rs. 571.14 crore (Previous Year Rs. Nil) repaid by Reliance Land Pvt. Ltd., Rs. 21.45 (Previous Year Rs. 33.30 crore) repaid by Reliance Share & Stock Brokers Pvt. Ltd. Loans to others as at March 31, 2007, lying in subsidiaries, includes Rs. 3.00 crore (Previous Year Rs. Nil) given to Medybiz Pvt. Ltd., Rs. 2.00 crore (Previous Year Rs. 2.00 crore) given to Reliance Gilts Ltd. Loans to others as at March 31, 2007, lying in fellow subsidiaries, includes Rs. 1 548.45 crore (Previous Year Rs. Nil) given to Reliance Communications Infrastructure Ltd. Loans to others as at March 31, 2007, lying in associates, Rs. 704.43 crore (Previous Year Rs. 778.41 crore) given to Reliance Land Pvt. Ltd. and Rs. 106.75 crore (Previous Year Rs. 68.20 crore) given to Reliance Share & Stock Brokers Pvt. Ltd. Interest Receivable on above Loans as at March 31, 2007 lying in subsidiaries, includes Rs. 0.10 crore (Previous Year Rs. Nil) due from Medybiz Pvt. Ltd. Interest Receivable on above Loans as at March 31, 2007 lying in fellow subsidiaries, includes Rs. 4.67 crore (Previous Year Rs. Nil) due from Reliance Communications Infrastructure Ltd.
vii)
viii) ix) x)
xi)
xii) xiii) xiv)
xv) xvi) xvii)
xviii) xix) xx) xxi) xxii) xxiii) xxiv) xxv) xxvi) xxvii)
58
Reliance Capital Limited
NOTES TO THE ACCOUNTS xxviii) xxix) xxx) xxxi) xxxii) Interest receivable on above loans as at March 31, 2007 lying in associates, Rs. 5.60 crore (Previous Year Rs. Nil) due from Reliance Land Pvt. Ltd. Advance recoverable in cash or kind lying in subsidiaries, includes Rs. 0.02 crore (Previous Year Rs. Nil ) advanced to Reliance General Insurance Co. Ltd. Advance recoverable in cash or kind lying in associates, includes Rs. Nil (Previous Year Rs. 0.02 crore) advanced to Reliance Capital Ventures Ltd. Advance recoverable in cash or kind includes Rs. 14 400 (Previous Year Rs. 20 864) repaid by Shri V. R. Mohan. Advance recoverable in cash or kind as at March 31, 2007, lying in subsidiaries, includes Rs. 0.02 crore (Previous Year Rs. Nil) receivable from Reliance General Insurance Company Ltd.
xxxiii) Advance recoverable in cash or kind as at March 31, 2007, lying in associates, includes Rs. Nil (Previous Year Rs. 0.02 crore) receivable from Reliance Capital Ventures Ltd. xxxiv) Advance recoverable in cash or kind as at March 31, 2007, includes Rs. 0.04 crore (Previous Year Rs. 0.04 crore) receivable from Shri V. R. Mohan. xxxv) Interest on advance recoverable in cash or kind as at March 31, 2007, includes Rs. 0.01 crore (Previous Year Rs. 0.01 crore) interest receivable from Shri V. R. Mohan. xxxvi) Sundry creditors as at March 31, 2007 lying in subsidiaries, includes Rs. 1.44 crore (Previous Year Rs. Nil) payable to Reliance Capital Asset Management Ltd. xxxvii) Sundry creditors as at March 31, 2007 lying in associates, includes Rs. Nil (Previous Year Rs. 0.06 crore) payable to Reliance Capital Ventures Ltd., xxxviii) Lease rentals income lying in associates, includes Rs. Nil (Previous Year Rs. 3.32 crore) received from Reliance Communications Infrastructure Ltd. and Rs. Nil (Previous Year Rs. 1.58 crore) from Reliance Telecom Ltd. xxxix) Interest and finance income, lying in subsidiaries, includes Rs. 0.10 crore (Previous Year Rs. Nil) due from Medybiz Pvt. Ltd. xl) xli) Interest and finance income, lying in fellow subsidiaries, includes Rs. 153.09 crore (Previous Year Rs. 113.28 crore) received from Reliance Communications Infrastructure Ltd. Interest and finance income, lying in associates, Rs. 17.98 crore (Previous Year Rs. Nil) received from Viscount Management Services Ltd., Rs. 26.77 crore (Previous Year Rs. Nil) received from Viscount Management Services (Alpha) Ltd., Rs. 8.39 crore (Previous Year Rs. 0.31 crore) received from Reliance Land Pvt. Ltd., Rs. 8.73 crore (Previous Year Rs. 2.82 crore) received from Reliance Share & Stock Brokers Pvt. Ltd., and Rs. 0.54 crore (Previous Year Rs. Nil) received from Ammolite Holdings Ltd. Sale of fixed assets lying in associates Rs. Nil (Previous Year Rs. 0.02 crore ) sold to Reliance Communications Infrastructure Ltd. Rent income lying in subsidiaries includes Rs. 1.34 crore (Previous Year Rs. 0.76 crore) received from Reliance Capital Asset Management Ltd. Rent income lying in fellow subsidiaries includes Rs. 4.41 crore (Previous Year Nil) received from Reliance Communication Infrastructure Ltd. Miscellaneous income lying in associates, includes Rs. Nil (Previous Year Rs. 0.04 crore) received from Reliance Share & Stock Brokers Pvt. Ltd. & Rs. Nil (Previous Year Rs. 0.04 crore) received from Reliance Telecom Ltd. Interest on others lying in associates, Rs. Nil (Previous Year Rs. 37.75 crore) paid to Reliance Communications Infrastructure Ltd. Rent expenditure lying in fellow subsidiaries / associates, Rs. 0.14 crore (Previous Year Rs. Nil) paid to Reliance Communications Infrastructure Ltd. & Rs. Nil (Previous Year Rs. 0.06 crore) paid to Reliance Capital Ventures Ltd. Insurance includes Rs. 0.09 crore (Previous Year Rs. 0.03 crore) paid to Reliance General Insurance Co. Ltd. Payments to and provisions for employees includes Rs. 0.25 crore (Previous Year Rs. 0.13 crore) paid to Shri V. R. Mohan. Professional fees Rs. 0.50 crore (Previous Year Rs. Nil) paid to Reliance Communications Infrastructure Ltd. Miscellaneous expenditure lying in subsidiaries / fellow subsidiaries, includes Rs. 0.22 crore (Previous Year Rs. Nil ) paid to Travelmate Services (India) Pvt. Ltd. and Rs. 0.62 crore (Previous Year Rs. Nil) paid to Reliance Communications Infrastructure Ltd. Contingent liability for bank guarantee given to Bank's and Financial institution lying in subsidiaries / associates includes Rs. 0.08 crore (Previous Year Rs. 0.12 crore) for Matrix Innovations Pvt. Ltd., Rs. 0.03 crore (Previous Year Rs. 0.04 crore) for Reliance Webstores Pvt. Ltd., Rs. 0.35 crore (Previous Year Rs. 13.50 crore) for Reliance Share and Stock Brokers Pvt. Ltd., and Rs. Nil (Previous Year Rs. 16.63 crore) for Reliance Telecom Ltd.
xlii) xliii) xliv) xlv) xlvi) xlvii) xlviii) xlix) l) li) lii)
59
Reliance Capital Limited
NOTES TO THE ACCOUNTS 12. Basic and Diluted Earning Per Share i) For the purpose of calculation of Basic & Diluted Earning Per Share the following amounts have been considered: (Rs. in crore) articulars ticular Par ticulars a) Amounts used as the numerators Net Profit after tax Net Profit available for equity shareholders b) c) d) Weighted average number of equity shares (Nos.) Basic Earning Per Share (Rs.) Diluted Earning Per Share (Rs.) 646.18 646.18 22 76 18 827 28.39 28.39 537.61 537.61 18 07 55 943 29.74 24.64 2006-07 2005-06
13. The deferred tax liability comprise of the following. (Rs. in crore) As at March 31, 2007 Deferr erre ta Deferred tax liabilities Related to Fixed Assets sset ets Deferr erre ta Deferred tax A ssets Related to disallowance under Income Tax Act, 1961 Net deferred tax liabilities / (Assets ) (3.88) 9.00 (58.13) (15.48) 12.88 42.65 As at March 31, 2006
Note : As at March 31, 2006 the Company had substantial unabsorbed depreciation and carry forward losses under the Income Tax Act 1961. However, the availability of sufficient future taxable income against which such depreciation and losses can be set off cannot be stated to be virtually certain. Hence, deferred tax asset was not recognized. 14. Disclosure of loans / advances and investments in its own shares by the listed companies, in its subsidiaries, associates etc. (as certified by the management) as required by clause 32 of listing agreement. (Rs. in crore) articulars ticular Par ticulars Outstanding Balance as on 31-3- 2007 Maximum Balance outstanding during the year
i)
Loans and advances in the nature of loans to subsidiaries i. ii. Reliance Gilts Ltd. (formerly Reliance Life Insurance Company Ltd.) Medybiz Pvt. Ltd. 2 (2) 3 (-) 2 (12) 3 (-)
ii)
Loans and advances in the nature of loans to associates a) b) c) d) e) Reliance Share & Stock Brokers Pvt. Ltd. Reliance Land Pvt. Ltd. Viscount Management Services Ltd. (Ceased to be an Associate on March 28, 2007) Ammolite Holdings Ltd. Reliance Communications Infrastructure Ltd. 106.75 (68.20) 704.43 (778.41) (-) 27.03 (-) 1 548.45 (-) 106.75 (68.20) 778.41 (778.41) (0.03) 27.03 (-) 1 548.45 (-)
60
Reliance Capital Limited
NOTES TO THE ACCOUNTS (Rs. in crore) articulars ticular Par ticul ars Outstanding Balance as on 31-3- 2007 Maximum Balance outstanding during the year
iii)
Loans and advances in the nature of loans where there is a) no repayment schedule or repayment beyond seven years 1) Loans to employees (in ordinary course of business) 2.33 (1.12) 2.00 (2.00) 3.00 (-) 404.43 (240.41) (-) 2.33 (1.12) Nil 2.33 (1.12) 2.00 (12.00) 3.00 (-) 714.69 (240.41) (0.03) 2.33 (1.12) Nil
b) no interest or interest below Section 372A of the Companies Act, 1956. 1) 2) 3) 4) 5) Reliance Gilts Ltd. (formerly Reliance Life Insurance Co. Ltd.) Medybiz Pvt. Ltd. Reliance Land Pvt. Ltd. Viscount Management Services Ltd. Loans to employees (in ordinary course of business)
iv)
Loans and advances in nature of loans to firms / companies in which directors are interested Investments by loanee in the shares of parent company and subsidiary company, when the company has made a loan or advance in the nature of loan
v)
No. of shares (-)
Amount (Rs. in crore) (-)
Figures in brackets indicate previous year figures 15 Disclosur osure detail ails requir equire by Revise Par ara Financial Companies Prudential (Reserv eser Disclosure of details as required by Revised Para 13 of Non Banking Financial Companies Prudential Norms (Reserve (Reserv eser ections, earlier Par ara Financial Companies Prudential Direc Bank) Direc tions, 2007, earlier Para 9BB of Non Banking Financial Companies Prudential Norms (Reser ve Bank) Directions, 1998. (Rs. in crore) articulars ticular Par ticulars (1) Loans and advances availed by NBFC inclusive of interest thereon but not paid a) Debentures : Secured Unsecured (Other than falling within the meaning of public deposits) Deferred Credits Term Loans Inter-corporate loans and borrowing Commercial Paper Other Loans (specify nature) i) Loan from Banks ii) Security deposit lease (-) (-) (-) (-) 409.89 (-) 848.16 (-) 145.00 (167.50) 1.60 (74.39) (-) (-) (-) (-) (-) (-) (-) Amount Outstanding Amount Overdue
b) c) d) e) f)
61
Reliance Capital Limited
NOTES TO THE ACCOUNTS (2) Break up of Loans and Advances including bills receivable (other than those included in (3) below a) Secured b) Unsecured Amount Outstanding (Rs. in crore) 698.43 (126.50) 2 977.32 (1078.06) 3 675.75 (1204.56) (3) Break up of Leased Assets and stock on hire and other assets counting towards AFC activities a) Lease assets including lease rentals under sundry debtors: 1) Financial Lease (Net of depreciation and lease adjustment) 2) Operating Lease (4) Break up of Investments a) Current Investments (Stock in Trade) 1) Quoted Shares - Equity Preference 0.01 (107.44) (-)
0.82 (6.19) (-)
b) Long Term Investments 1) Quoted Shares - Equity Preference 1 178.25 (818.92) (-)
2) Unquoted Shares - Equity Preference
Debentures and Bonds Units of Mutual funds GOI Securities Rs. 45 000 (Previous year Rs. 45 000) Others (please specify) - Warrants Reliance Capital Partners current account To tal
500.50 (256.30) 110.00 (28.70) 479.85 (1100.23) 2.00 (25.00) 9.73 (1.07) 154.01 (-) 2 435.16 (2 236.41)
62
Reliance Capital Limited
NOTES TO THE ACCOUNTS (5) Borrower group-wise classification of assets financed as in (2) and (3) above: (Rs. in crore) Amount Net of Provisions Secured a) Related Parties 1) Subsidiaries (-) 2) Companies in the same group (-) 3) Other related parties (-) b) Other than related parties Total 698.43 (126.50) 698.43 (126.50) 5.10 (2.00) (0.02) 2 397.48 (846.61) 574.75 (336.86) 2 977.33 5.10 (2.00) (0.02) 2 397.48 (846.61) 1 273.18 (463.36) 3 675.76 Unsecured To tal
(1 185.49) (1 311.99) (Rs. in crore) alue Book Value (net of provisions) 403.79 (89.05) (5.05) 1 036.80 (1 748.52) 993.75 (394.19) 2 434.34 (2 236.81)
(6) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted excluding stock in trade) a) Related Parties 1) Subsidiaries 2) Companies in the same group 3) Other related parties b) Other than related parties To tal
arket alue Market Value / Bre alue Break up Value Fair alue NAV or Fair Value or NAV 403.79 (179.69) (40.93) 1 967.77 (3 566.52) 2 285.38 (317.58) 4 656.94 (4 104.72)
(7) Other Information a) Gross Non Performing Assets 1) Related parties 2) Other than related parties b) Net Non Performing Assets 1) Related Parties 2) Other than related parties c) Assets acquired in satisfaction of debt
(Rs. in crore) (-) 18.00 (4.50) (-) 13.50 (1.35) (-)
Companies in the same group means companies under the same management as per section 370(1B) of the Companies Act, 1956. Figures in brackets indicate previous year figures Note: Investments in case of unquoted shares it is assumed that market value is same as book value.
63
Reliance Capital Limited
NOTES TO THE ACCOUNTS 16. Stock in trade (Rs. in crore) QUANTITY As at As at March 31, March 31, 2007 2006 SHARES: EQUITY SHARES Bag Films Ltd. Gitanjali Gems Ltd. Kothari Industries Corporation Ltd. * Re. 1 Kothari Sugars & Chemicals Ltd. Padmalaya Telefilms Ltd. Rallis India Ltd. Equit Shares quity To tal Equity Shares GRAND TOTAL VALUE As at March 31, 2007 As at March 31, 2006
3 94 400 3 93 880 34 123 5 11 000 13 33 403
3 94 400 2 00 000 3 93 880 34 123 5 11 000 2 95 289 18 28 692
0.25 * 0.04 0.53 0.82 0.82
0.25 3.42 0.04 0.05 0.65 1.78 6.19 6.19
Note: Above includes i) 3 93 880 equity shares of Kothari Industrial Corporation Ltd. delivered to the Escrow Agency namely UTI Bank Ltd. pursuant to the Settlement Order of the Hon’ble Supreme Court of India. The settlement proceeds will be received upon due completion of the process of the Order. 17. Particulars in respect of Opening Stock, Purchase, Sales and Closing Stock for Stock in Trade. (Rs. in crore) QUANTITY As at As at March 31, March 31, 2006 2007 ST OPENING STOCK Equity Shares Preference Shares Debentures Government Securities PSU Bonds Mobile Handsets VALUE As at March 31, 2007 As at March 31, 2006
18 28 692 -
1 73 36 821 2 00 000 -
6.19 6.19
304.05 2.00 306.05
PURCHASES Equity Shares Preference Shares Debentures Government Securities PSU Bonds Mobile Handsets 15 78 567 1 48 03 879 143.17 143.17 SALES Equity Shares Preference Shares Debentures 20 73 856 3 03 12 008 2 00 000 162.15 877.71 2.00 536.33 536.33
64
Reliance Capital Limited
NOTES TO THE ACCOUNTS Government Securities PSU Bonds Mobile Handsets 162.15 CLOSING ST CLOSING STOCK Equity Shares Preference Shares Debentures Government Securities PSU Bonds Mobile Handsets 13 33 403 18 28 692 0.82 0.82 18. Expenditur ure for oreign currenc ency Expenditure in foreign currency (Rs. in crore) articulars ticular Par ticular s i) ii) 19. Travelling Expenses Others 2006-2007 1.12 3.13 2005-2006 0.03 0.77 6.19 6.19 879.71
(a) Previous year's figures have been reworked, regrouped and reclassified wherever necessary. (b) Figures have been presented in 'crore' of rupees with two decimals in accordance with the approval received from the Company Law Board. Figures less than Rs. 50 000 have been shown at actual in brackets. (c) Figures for the current year include figures of erstwhile with Reliance Capital Ventures Ltd. (RCVL) which was amalgamated with the Company with effect from July 17, 2006 and are therefore to that extent are not comparable with those of the previous year.
65
Reliance Capital Limited
NOTES TO THE ACCOUNTS BALANCE ABSTRAC COMP OMPANY’S BUSINES 20. BAL ANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE I. Registration Details Registration No. : 3 1 1 0 6 3 5 2 6 0 4 0 5 7 State Code : 1 1
Balance Sheet Date :
II. Capital raised during the year (Rs. in crore) Public Issue Bonus Issue : : N N I I L L Rights Issue Private Placement* : : 2 1 N . I 7 L 0
III.P Mobilis obilisation Deplo Funds cror ore) III.Position of Mobilisation and Deployment of Funds (Rs. in crore) Total Liabilities Sourc Funds Sources of Funds Paid-up Capital Equity Warrants Reserves & Surplus Secured Loans Unsecured Loans : : : : : : : 1 4 9 1 2 1 4 5 5 5 7 2 4 6 . N . . . 1 I 0 0 9 6 L 7 0 6 6 5 7 3 . 1 9 Total Assets Application Funds Application of Funds Net Fixed Assets Investments Net Current Assets : : : 2 4 4 0 9 3 4 8 4 0 . . . N N 7 3 1 I I 1 4 4 L L : 6 5 7 3 . 1 9
Miscellaneous Expenditure : Accumulated Losses :
erformance Compan ompany cror ore) I V. Performance of Company (Rs. in crore) Turnover Profit before Tax : : 8 7 8 3 3 3 . . 8 1 6 8 Total Expenditure Profit after Tax Dividend Rate % 2 8 . 3 9 : : : 1 6 5 4 0 6 . . 6 1 3 8 8 5
Earning per Share (Rs.) Basic
Names Three Principal Product Servic vices Compan ompany monetar terms) ary V. Generic Names of Three Principal Product s / Services of Company (as per monetary terms) Item Code : Product Description I. Asset Financing II. Lending III. Investments
For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain Mohan V. R. Mohan
66
Reliance Capital Limited
FLO ST FOR C ASH FL O W S T ATEMENT F OR THE YEAR ENDED MARCH 31, 2007 articulars ticular Par ticulars Cash Fl fr Operating A. Cash Flow from Operating Ac tivities prof befor ta ofit ore Net profit before tax as per P & L Ac count Adjusted for Prior period item prof befor ta ofit ore items Net profit before tax and prior period items Adjusted for Depreciation Lease Equalisation Balances Written Off Provision for Non Performing Asset (Net) Provision for Gratuity / Leave Encashment Excess Provision / Credit Balance Written Back Investments Interest Dividend Income (Profit) / Loss on sale of Investment (Net) Interest Expenses Loss / (Profit) on sale of Fixed Assets (Net) Operating Profit before working Capital Changes Operating Profit befor working Capit Changes ore apital Adjusted for Trade and Other Receivables Proceeds from / (Repayment of) Short Term Borrowings Inventories Trade Payables generate fr enerat operations Cash generated from operations Interest Paid Taxes Paid Cash Flow before prior period item Fl befor ore item Prior period item Cash fr (use Operating ye Net Cash from / (used in) Operating Ac tivities during the year Fl fr Inv B. Cash Flow from Investing A c tivities Purchase of Fixed Assets Sale of Fixed Assets Purchase of Investments Acquisition of Subsidiaries Investment in Partnership Firm Sale of Investments Interest Received Dividend Received Cash fr (use Inv ye Net Cash from / (used in) Investing Ac tivities during the year Fl fr Financing C. Cash Flow fr om Financing Ac tivities Issue / (Redemption) of Share Capital (including Warrants) Proceeds from Long Term Borrowings Repayment of Long Term Borrowings Dividends Paid Cash fr (use Financing ye Net Cash from / (used in) Financing Ac tivities during the year 2006-07 733.18 (1.73) 731.45 7.07 11.97 1.07 1.35 2.71 (0.18) (34.53) (503.57) 42.63 23.19 23.35 0.20 0.15 (142.45) (7.14) (411.47) 45.20 (1.26) (Rs. in crore) 2005-06 550.61 (0.04) 550.57
(471.48) 259.97
(470.23) 80.34
(2 149.54) 1 211.51 5.37 24.02 (31.38) (47.63)
(908.64) (648.67) (79.01) (727.68) 1.73 (725.95) (29.15) (2 403.56) (29.73) (152.23) 2 918.39 34.53 338.25 445.27 (59.72) 385.55
(1 271.00) (1 072.50) 8.29 6.53 (2 328.68) (2 248.34) (45.20) (9.00) (54.20) (2 302.54) 0.04 (2 302.50) (1.45) 1.28 (2 874.42) 2 990.84 0.26 7.14 123.65 2 228.25 20.08 (19.24) (43.74) 2 185.35 6.50 5.45 11.95
Net increase / (decrease) in Cash and Cash Equivalents ( A + B + C ) (2.15) Opening Balance of Cash and Cash Equivalents 11.95 9.80 Closing Balance of Cash and Cash Equivalents* (Refer Schedule “G”) The previous year's figures have been regrouped and reclassified wherever necessary. * Fixed Deposits with banks under pledge are not considered as Cash & Cash Equivalents. As per our report of even date For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768 For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani
Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain Mohan V. R. Mohan
67
Reliance Capital Limited
STA COMP OMPANIE COMP OMPANY’S STATEMENT PURSUANT T O SEC TI ON 212 OF THE C OMP ANIE S A C T, 1956, REL ATING T O C OMP ANY’S SIDIARY COMP OMPANIE INTERE S T IN THE SUB SIDIAR Y C OMP ANIE S
(Rs. in crore)
Name of the Subsidiary Company
Reliance Capital Asset Management Ltd.
Reliance apita ruste C apit a l Truste e Co. Ltd.
Reliance General Insurance Company Ltd. March 31, 2007 January 15, 2002 10 32 72 127 Equity Shares of the face value of Rs. 10 each fully paid up
Reliance Gilts td. (formerl ormerly L t d. (formerly eliance Life R eliance Life Insurance Company Ltd.) March 31, 2007 January 15, 2002 20 007 000 Equity Shares of the face value of Rs. 10 each fully paid up
Reliance Asset Management (Mauritius) Ltd. March 31, 2007 October 11, 2005 1 000 Equity Shares of the face value of US$ 10 each fully paid up
1. The financial year of the Subsidiary Companies ended on 2. Date from which they became Subsidiary Companies 3. (a) Number of shares held by Reliance Capital Limited with its nominees in the Subsidiaries as at March 31, 2007
March 31, 2007 May 12, 1995 75 00 700 Equity Shares of the face value of Rs. 10 each fully paid up and 3 50 000 Preference Shares of Rs. 100 each fully paid up 100%
March 31, 2007 May 12, 1995 50 700 Equity Shares of the face value of Rs. 10 each fully paid up
(b) Extent of Interest of Holding Company as at March 31, 2007 4. The net aggregate amount of the Profit/(Loss) so far at it concerns the members of the Holding Company (a) Not dealt with in the Holding Company’s Accounts (i) For the financial year ended March 31, 2007 (ii) For the previous financial years of the Subsidiary Companies since they became the Holding Company’s Subsidiaries (b) Dealt with in the Holding Company’s Accounts (i) For the financial year ended March 31, 2007 (ii) For the previous financial years of the Subsidiary Companies since they became the Holding Company’s Subsidiaries
100%
100%
100%
100%
48.63 52.53
0.00 0.15
1.63 33.25
-
(0.07) (0.09)
0.78
-
-
-
-
For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain Mohan V. R. Mohan
68
Reliance Capital Limited
(Rs. in crore)
Reliance Asset Management (Singapore) Pte. Ltd. March 31, 2007 August 22, 2005 3 Equity Shares of the face value of SGD 1 each fully paid up
elmate Serv ce Tr a v elmat e Ser v i c e s Medybiz (India) Private Private Limited Limited
Net Logistics Private Limited
Reliance Capital Research Private Limited March 31, 2007 February 20, 2007 10 000 Equity Shares of the face value of Rs. 10 each fully paid up
Reliance echnolo Technol o g y Ventures Private Limited March 31, 2007 February 23, 2007 10 000 Equity Shares of the face value of Rs. 10 each fully paid up
Reliance Venture Asset Management Private Limited March 31, 2007 October 3, 2006 10 000 Equity Shares of the face value of Rs. 10 each fully paid up
March 31, 2007 November 29, 2006 1 38 13 140 Equity Shares of the face value of Rs. 10 each fully paid up
March 31, 2007 February 16, 2007 24 74 000 Equity Shares of the face value of Rs. 10 each fully paid up
March 31, 2007 February 16, 2007 9 000 Equity Shares of the face value of Rs. 10 each fully paid up
100%
100%
100%
90%
100%
100%
100%
(2.67) (0.04)
2.17 -
(0.88) -
-
-
-
-
-
-
-
-
-
-
-
69
Reliance Capital Limited
ORS’ CONSOL ST A UDI T ORS ’ REPOR T ON C ONSOL ID A TED FINANCIAL S T ATEMENT S To, The Board of Directors, Reliance Capital Limited We have audited the attached Consolidated Balance Sheet of eliance Capit apital Limite R elianc e C apit al Limit e d ('the Company' or 'the Parent Company') and its subsidiaries and associates (as per the list appearing in Note no. 18 of Schedule "N" to the consolidated financial statements) (Collectively referred to as the 'Group') as at March 31, 2007, the related Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for the year then ended annexed thereto. These financial statements are the responsibility of the Company's ompany's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 1. We conducted our audit in accordance with generally accepted auditing standards in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are prepared, in all material respects, in accordance with the financial reporting framework generally accepted in India and are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 2. We did not audit the financial statements of Reliance Capital Asset Management Limited, Reliance Asset Management (Mauritius) Limited, Reliance Asset Management (Singapore) Pte. Limited, Reliance General Insurance Company Limited, Reliance Gilts Limited, Reliance Capital Trustee Co. Limited, Reliance Venture Asset Management Pvt. Ltd., Medybiz Private Ltd. and Net Logistics Pvt. Ltd., whose financial statements reflect total assets of Rs. 923.82 crore as at March 31, 2007, total revenue of Rs. 594.75 crore and net cash flows amounting to Rs. 1.81 crore for the year then ended. These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on the report of the other auditors. 3. In case of Travelmate Services (India) Pvt. Ltd., Reliance Capital Research Pvt. Ltd. (Formerly Cheetah Global Fund Services Pvt. Ltd.), Reliance Technology Ventures Pvt. Ltd., and Reliance Capital Partners ('Firm') whose financial statements have been audited by one of us, reflect total assets of Rs. 26.67 crore as at March 31, 2007, total revenue of Rs. 12.70 crore and net cash flows amounting to Rs. 9.79 crore for the year then ended. 4. The financial statements of Reliance Land Pvt. Ltd., an associate company, have been audited by one of us, and another associate companies Reliance Share & Stock Brokers Pvt. Ltd., and Reliance Asset Reconstruction Co. Ltd. has been audited by other auditors whose reports have been furnished to us and financial statements of two other associate companies i.e. WorldTel Holding Ltd. and Ammolite Holdings Ltd. have been certified by the management and our opinion, in so far as it relates to the amounts included in respect of these associates, are based solely on the reports of the other auditors/management certified financial statements as the case may be. 5. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of the Accounting Standard 21, 'Consolidated Financial Statements' and Accounting Standard 23, 'Accounting for Investment in Associates in Consolidated Financial Statements', issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of the Company, its subsidiaries and its associates included in the consolidated financial statements. 6. On the basis of information and explanation given to us and on the consideration of the separate audit reports on individual audited financial statements of the Company, its Subsidiaries and its Associates, we are of the opinion that the said consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Consolidated Balance Sheet, of the Consolidated State of Affairs of the Group as at March 31, 2007; (ii) in the case of the Consolidated Profit and Loss Account, of the Consolidated Results, of the operations of the Group for the year then ended; and (iii) in the case of the Consolidated Cash Flow Statement, of the Consolidated Cash Flows of the Group for the year then ended. For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768
70
Reliance Capital Limited
DETAIL AILS SUBSIDIAR COMPANIE FORMING PAR SIDIARY ANIES ART CONSOL IDA ONSOLID ST TEMENTS DETAILS OF SUBSIDIARY COMPANIE S FORMING PART OF CONSOL IDATED FINANCIAL STATEMENTS (Rs. in crore) Sr. Sr. No. articulars ticular Par ticular s Capital Reserves To tal Assets urnov To t al Investments Turnover Profit Provision Profit Proposed befor ore / To t al before after Dividend Liabilities for Income Tax ation Ta x ation Tax ation
1
Reliance Capital Asset Management Ltd. Reliance Capital Trustee Co. Ltd. Reliance General Insurance Company Ltd. Reliance Gilts Ltd. (formerly Reliance Life Insurance Co. Ltd.)
11.00
101.42 141.59
29.16
64.34
203.70
71.92
23.28
48.63
-
2
0.05
0.15
0.27
0.06
0.18
0.05
-
-
-
-
3
103.07 156.33 735.08 475.68 632.17 1 055.85
2.24
0.61
1.63
-
4
2.00
-
4.45
0.45
-
-
-
-
-
-
5
Reliance Asset Management (Mauritius) Ltd. Reliance Asset Management (Singapore) Pte. Ltd. Travelmate Services (India) Private Ltd. Medybiz Private Ltd. Net Logistics Private Ltd. Reliance Capital Research Private Ltd. Reliance Technology Ventures Pvt. Ltd. Reliance Venture Asset Management Pvt. Ltd.
0.47
(0.16)
0.71
0.39
-
-
(0.07)
-
(0.07)
-
6
5.68
(2.75)
3.49
0.56
-
1.09
(2.67)
-
(2.67)
-
7
13.81
1.86
24.76
9.09
0.02
11.12
3.24
1.07
2.17
-
8 9
2.47 0.01
(3.94) 0.02
1.99 0.05
0.45 0.02
-
3.21 0.02
(0.84) -
0.04 -
(0.88) -
-
10
0.01
0.01
0.01
-
-
1.80
-
-
-
-
11
0.01
0.01
0.01
-
-
-
-
-
-
-
12
0.01
0.01
0.01
-
-
-
-
-
-
-
Exchange rate as on March 31, 2007: 1 US$ = Rs. 43.10, 1 SGD = Rs. 28.41
71
Reliance Capital Limited
C ONSOL ID A TED BAL ANCE SHEET AS A T MARCH 31, 2007 SCHEDUL E SOURCES OF FUNDS Shareholder Funds eholders Shareholders’ Funds (a) Share Capital (b) Equity Warrants Issued & Subscribed (Refer Note No. 2 of Schedule "A") (c) Reserves & Surplus Minority Interest Funds Loan Funds (a) Secured Loans (b) Unsecured Loans As at March 31, 2007 (Rs. in crore) As at March 31, 2006
A
246.16 5 056.22 5 302.38 -
223.40 49.48 3 938.54 4 211.42 38.69 167.50 74.39 1 402.96 241.89 0.86 4 492.86
B
C D
145.00 1 257.96
Deferred Tax Liability (Net) (Refer Note No. 15 of Schedule "N") TOTAL APPLIC TION ICA FUNDS: APPL ICATION OF FUNDS: Goodwill (Refer Note No. 1 of Schedule "B") Fixed Assets (a) Gross Block (b) Less: Depreciation (c) Lease Adjustment A/c (d) Net Block (e) Capital Work-in-Progress Investments urrent sset Loans ets, Advances Current A sset s, Loans & Advances (a) Stock in Trade (b) Sundry Debtors (c) Cash & Bank Balances (d) Other Current Assets (e) Loans & Advances Less : Current Liabilities & Provisions Curr urrent Pr (a) Current Liabilities (b) Provisions Net Current Assets Miscellaneous Expenditure (to the extent not written off or adjusted) TOTAL Accounting Policies Notes to the Accounts As per our report of even date For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768 M N F G 30.72 277.63 212.12 153.92 3 758.29 4 432.68 H 306.47 410.41 716.88
7.51 6 712.85
0.07 E 348.03 229.06 0.00 118.97 19.92 138.89 2 853.06 6.19 77.67 201.56 618.94 1 223.88 2 128.24 102.39 123.15 225.54 3 715.80 I 5.03 6 712.85 390.63 246.29 32.73 177.07 13.13
-
190.20 2 393.75
1 902.70 6.21 4 492.86
Schedules referred to above form an integral part of the Balance Sheet For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain V. R. Mohan Mohan
72
Reliance Capital Limited
LOS FOR C ONSOL ID A TED PROFI T & L OS S A C C OUNT F OR THE YEAR ENDED MARCH 31, 2007 SCHEDULE INCOME Operating & Other Income EXPENDITURE Interest & Finance Charges Administrative & Other Expenses Depreciation Impairment Loss Miscellaneous Expenditure Written Off J K L 42.70 1 288.37 13.96 0.12 1.19 1 346.34 PROFIT BEFORE TAX PROFIT BEFORE Provision for Current Taxation Provision for Fringe Benefit Tax Provision for Deferred Tax PROFIT PROFIT AFTER TAX (Short) / Excess Provision for Tax (Previous Year) Less: Minority Interest's Share of Profit PROFIT MINORIT INTERES PROFIT AFTER MINORIT Y INTEREST Share of Profit / (Loss) of Associates Loss on sale of Investment in Associate PROFIT AFTER SHARE OF PROFIT / (LOSS) OF ASSOCIATE S PROFIT PROFIT (LOS OSS) ASSOCIATES SOCIATE Excess Provision for Dividend (Include Dividend Tax) Reversal (Refer Note No. 3 (d) of Schedule "N") Balance Brought Forward Profit available for appropriation APPROPRIATI TIONS APPROPRIATIONS Proposed Dividend - Equity Shares Corporate Dividend Tax Transfer to Statutory Reserve Fund Transfer to General Reserve Balance Carried to Balance Sheet 811.52 102.84 2.53 6.65 699.50 0.22 699.72 3.49 703.21 21.93 583.81 1 308.95 85.97 14.61 129.24 64.62 1 014.51 1 308.95 Basic Earning per equity share of Rs. 10 each (Rs.) (Without Associate Share of Profit) Basic Earning per equity share of Rs. 10 each (Rs.) (With Associate Share of Profit) Diluted Earning per equity share of Rs. 10 each (Rs.) (Without Associate Share of Profit) Diluted Earning per equity share of Rs. 10 each (Rs.) (With Associate Share of Profit) (Refer Note No.13 of Schedule “N”) Accounting Policies M Notes to the Accounts N Schedules referred to above form an integral part of the Profit & Loss Account 30.73 30.89 30.73 30.89 2006-07 2 157.86 45.20 259.69 25.55 1.19 331.63 615.42 34.78 0.19 (0.52) 580.97 0.88 3.59 578.26 0.20 (7.09) 571.37 255.06 826.43 71.32 10.00 107.53 53.77 583.81 826.43 32.14 31.61 26.50 26.19 (Rs. in crore) 2005-06 947.05
As per our report of even date For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768
For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain V. R. Mohan Mohan
73
Reliance Capital Limited
FORMING PAR ART IDA SCHEDULES F ORMING P AR T OF THE C ONSOL ID A TED BAL ANCE SHEET AS A T MARCH 31, 2007 (Rs. in crore) As at March 31, 2007 SCHEDULE “A” CAPI APIT SHARE CAPITAL Authorised: 30 00 00 000 Equity Shares of Rs. 10 each (30 00 00 000) 10 00 00 000 Preference Shares of Rs. 10 each (1 00 00 000) 300.00 100.00 300.00 100.00 As at March 31, 2006
400.00 Issued and Subscribed 24 69 77 006 Equity Shares of Rs. 10 each (22 42 10 451) Add : Shares issued on conversion of Equity warrants 2 17 00 000 of Rs. 10 each (Previous Year Nil) (Refer Note No. 2 below) Add : Shares issued and allotted pursuant to to the Scheme of Amalgamation 6 11 56 521 of Rs. 10 each (Previous Year Nil) (Refer Note. no. 3 (c) (ii) of Schedule "N") Less: Shares Cancelled as per the Scheme of Amalgamation as approved by the Hon'ble High Court - 6 00 89 966 of Rs. 10 each (Previous Year Nil ) (Refer Note. no. 3 (c) (iii) of Schedule "N") 224.21 224.21
400.00
21.70
-
61.16
-
60.09
-
246.98 Paid up 24 56 32 800 Equity Shares of Rs. 10 each (22 28 66 245) Add: Forfeited Shares (Amount originally paid up on 13 44 206 Equity Shares (Previous Year 13 44 206) 245.63 – 222.87
224.21
0.53 246.16 246.16
0.53 223.40 223.40
NOTES 1 Of the above Equity Shares: i) 29 36 555 shares (Previous year 18 70 000) were allotted as fully paid-up pursuant to the Scheme of Amalgamation and Arrangement without payment being received in cash. ii) 6 11 56 521 shares were allotted to the shareholders of Reliance Capital Ventures Ltd. pursuant to the scheme of amalgamation and arrangement sanctioned by the Hon'ble High Court of Gujarat at Ahmedabad and the Hon'ble High Court of Judicature at Bombay. iii) 6 00 89 966 shares held by Reliance Capital Ventures Ltd. pursuant to the scheme of amalgamation and arrangement sanctioned by the Hon'ble High Court of Gujarat at Ahmedabad and the Hon'ble High Court of Judicature at Bombay were cancelled. iv) 12 63 89 839 shares are held by AAA Enterprises Pvt Ltd., the holding company. v) 5 76 450 shares are held by Reliance Innoventures Pvt Ltd (Formerly Reliance Innoventures Ltd.), the Ultimate Parent Company. 2 The Company has allotted 2 17 00 000 equity shares of Rs. 10 each at a price of 228 per share on Januray 30, 2007, pursuant to the exercise of option by AAA Enterprises Pvt. Ltd. for conversion of equal number of warrants to equity shares.
74
Reliance Capital Limited
PAR ART CONSOL SCHEDULES F ORMING P AR T OF THE C ONSOL ID A TED BAL ANCE SHEET AS AT MARCH 31, 2007 (Rs. in crore) As at March 31, 2007 SCHEDULE “B” RESERVES AND SURPLUS Capital Reserve As per last Balance Sheet Add :- Amount transferred on Amalgamation (Refer Note No. 3 (c) (v) of Schedule "N") apital Reserv eser Consolid onsolidation Subsidiaries Capital Reserve on Consolidation of Subsidiaries As per last Balance Sheet Add : Capital Reserve on Consolidation of Subsidiaries Less : Goodwill on consolidation of Subsidiaries 4.84 12.69 17.60 (0.07) Add: Goodwill shown separately (Refer Note 1 below) Capital Redemption Reserve As per last Balance Sheet Add: Amount transferred from Profit & Loss Account 10.13 10.13 Securities Premium Account As per last Balance Sheet Add: On Issue of Shares 2 817.90 473.06 3 290.96 Statutor Reserv Fund atutory eser Statutory Reserve Fund * As per last Balance Sheet Add: Amount transferred from Profit & Loss Account 287.23 129.24 416.47 General Reserve As per last Balance Sheet Add: Amount transferred on Amalgamation (Refer Note No. 3 (c) (v) of Schedule "N") Add: Amount transferred from Profit & Loss Account 228.25 24.85 64.62 317.72 Profit & Loss Account 1 014.51 5 056.22 * Created pursuant to Reserve Bank of India (Amendment) Act, 1997. NOTE: 1. Excess of Goodwill over Capital Reserve on consolidation of subsidiaries has been shown separetely. 174.48 53.77 228.25 583.81 3 938.54 179.70 107.53 287.23 734.69 2 083.21 2 817.90 0.07 10.13 10.13 6.38 0.05 6.43 4.84 4.84 6.38 6.38 As at March 31, 2006
75
Reliance Capital Limited
FORMING PAR ART IDA SCHEDULES F ORMING P AR T OF THE C ONSOL ID A TED BAL ANCE SHEET AS A T MARCH 31, 2007 (Rs. in crore) As at March 31, 2007 SCHEDULE “C” SECURED LOANS From Banks 145.00 145.00 NOTE: 1 2 The above loan is secured against the pledge of Fixed Deposits. Amount payable within one year is Rs. 145.00 crore (Previous Year Rs. 167.50 crore). 167.50 167.50 As at March 31, 2006
SCHEDULE “D” UNSECURED LOANS From Bodies Corporate Commercial Paper Security Deposit Received - Lease 408.20 848.16 1.60 1 257.96 NOTE: 1 2 Amount payable within one year is Rs. 1.60 crore (Previous Year Rs. 14.39 crore). In Respect of Commercial Papers (at Face Value): a. Commercial Paper amounting to Rs. 105 crore, maturing on May 14, 2007. b. Commercial Paper amounting to Rs. 75 crore, maturing on May 16, 2007. c. Commercial Paper amounting to Rs. 160 crore, maturing on June 8, 2007. d. Commercial Paper amounting to Rs. 375 crore, maturing on June 28, 2007. e. Commercial Paper amounting to Rs. 150 crore, maturing on May 28, 2007. 74.39 74.39
76
FORMING PAR ART CONSOL IDA SCHEDULE S F ORMING PAR T OF THE C ONSOL ID ATED BAL ANCE SHEET AS AT MARCH 31, 2007 SCHEDULE “E” FIXED ASSETS DESCRIPTION As at 1-4-06 Rs. 139.42 105.79 245.21 119.78 5.45 9.70 3.15 6.09 144.19 1.25 390.63 552.06 Gross Block Additi./ Dedu./ Adj. Adj. Rs. Rs. 1.03 11.45 19.28 6.45 10.61 11.90 60.72 3.23 63.95 5.79 105.79 105.79 0.09 0.04 0.33 0.09 0.18 0.73 0.03 106.55 167.22 As at 31-3-07 Rs. 139.42 139.42 120.81 16.81 28.94 9.27 10.52 17.81 204.16 4.45 348.03 390.63 As at 1-4-06 Rs. 139.10 33.08 172.18 60.90 3.53 4.68 1.19 3.13 73.43 0.68 246.29 311.40 For the Year Rs. 0.32 0.32 2.97 1.35 2.55 1.77 1.03 3.06 12.72 0.92 13.96 25.57 Depreciation AddiDedu-tions -ctions Rs. Rs. 0.46 0.10 0.21 0.08 0.19 0.99 2.02 0.26 2.28 33.08 33.08 0.03 0.02 0.16 0.07 0.11 0.39 0.01 33.48 90.68 As at 31-3-07 Rs. 139.42 139.42 64.33 4.95 7.42 2.88 1.14 7.07 87.79 1.85 229.06 246.29 Lease Adju. 31-3-07 (Rs. in crore) Net Block As at As at 31-3-07 31-3-06 Rs. Rs. 56.48 11.86 21.52 6.39 9.38 10.74 116.37 2.60 118.97 177.07 19.92 19.92 13.13 13.13 12.29 93.47 105.76 58.88 1.92 5.02 1.96 2.96 70.74 0.57 177.07
ASSETS ON LEASE Plant & Machinery Furniture & Fittings Ships Aircraft Office & Other Equipments Sub - total ASSETS FOR OWN USE Buildings Furniture & Fittings Office & Other Equipments Motor Vehicles Lease Hold Improvement Computers Sub - total INTANGIBLE ASSETS Computer Software * Grand Total Previous Year CAPITAL WORK-IN-PROGRESS Assets for own use Total NOTES: 1
32.73
2 3 4
5 6
Buildings include: (i) cost of shares in Co-operative Societies Rs. 2 500 (Previous Year Rs. 2 500) (ii) Rs. 92.94 crore (Previous Year Rs. 92.94 crore) incurred towards purchase / acquisition of 131 881 equity shares of Re. 1 each of Mature Trading & Investments Pvt. Ltd. with a right of occupancy of certain area of commercial premises. Addition to gross block of buildings and accumulated depreciation thereon included Rs. 1.03 crore and Rs. 0.46 crore on merger of Reliance Capital Ventures Ltd. on July 17, 2006 as per the Scheme of Amalgamation & Arrangement approved by the Hon'ble High Court of Gujarat at Ahmedabad and the Hon’ble High Court of Judicature at Bombay. Addition to fixed assets and depreciation thereon during the year includes gross block of assets Rs. 2.83 crore and accumulated depreciation Rs. 1.83 crore thereon of subsidiaries acquired during the year. Capital Work-in-progress includes: a) Rs. 13.05 crore (Previous Year Rs. 13.05 crore) incurred towards purchase / acquisition of 50 000 equity shares of Rs. 10 each of Legend Housing Pvt. Ltd. with a right of occupancy of certain area in a commercial / residential premise under construction. b) Rs. 6.87 crore (Previous Year Rs. 0.08 crore) advance against capital expenditure. * Remaining useful life of intangible assets is 4 years, other than internally generated assets. # Refer Note no. 1 of Schedule “G”.
Reliance Capital Limited
77
Reliance Capital Limited
FORMING PAR ART IDA SCHEDULES F ORMING P AR T OF THE C ONSOL ID A TED BAL ANCE SHEET AS A T MARCH 31, 2007 As at March 31, 2007 SCHEDULE “F” INVE MENTS VES IN VE STMENTS In Associates (carrying amount) In Government and Other Securities In Equity Shares In Preference Shares In Others SCHEDULE “G” CURRENT ASSETS, LOANS AND ADVANCES CURRENT ASSETS Stock in Trade Sundry Debtors (Unsecured) Debts outstanding for a period exceeding six months - Considered Doubtful - Considered Good Other Debts, considered good Cash & Bank Balances Cash & Cheques on hand Balances with Scheduled Banks In Current Accounts Non Schedule Bank in Current Accounts In Fixed Deposit Account Other Current Assets Income Accrued on Investments Asset Held for sale (Refer Note No. 1 below) Receivables for Assets on Lease (Rs. in crore) As at March 31, 2006
35.50 202.79 1 511.69 113.50 989.58 2 853.06
31.11 0.40 21.20 2 341.04 2 393.75
30.72
6.19
0.03 2.64 2.67 274.96 277.63 4.80 36.33 2.08 168.91 212.12 60.44 93.47 0.01 153.92 674.39
77.67 77.67 6.16 18.25 177.15 201.56 617.26 1.68 618.94 904.36
LOANS & ADVANCES Loan to Others - Considered Doubtful - Portfolio Assignment - Considered Good Advances recoverable in Cash or in kind or for value to be received - Considered Doubtful - Considered Good Deposits Taxes Paid (Net)
3.00 133.13 3 430.75 3 566.88
3.15 1 121.36 1 124.51
134.89 134.89 22.61 33.91 56.52 3 758.29
33.31 33.31 8.36 57.70 66.06 1 223.88
78
Reliance Capital Limited
PAR ART CONSOL SCHEDULES F ORMING P AR T OF THE C ONSOL ID A TED BAL ANCE SHEET AS AT MARCH 31, 2007 NOTES: 1 Assets held for sale represents Aircraft at written down value as on April 1, 2006 that was previously classified as a fixed asset. 2 3 Loan to others include Rs. 5.00 crore (Previous Year Rs. 2.00 crore) due from subsidiary companies. Advances recoverable in cash or in kind includes Rs. Nil crore (Previous Year Rs. 0.02 crore) due from the Reliance Capital Ventures Ltd. (Maximum balance outstanding at any time during the year Rs. Nil crore (Previous Year Rs. 0.02 crore), a company under same management. Advances recoverable in cash or in kind includes Rs. 57.52 crore (Previous Year Rs. 8.09 crore) paid towards share application money pending allotment. Advances recoverable in cash or in kind includes Rs. 0.05 crore due from the Manager / Officer (Previous Year Rs. 0.05 crore) (Maximum balance outstanding at any time during the year Rs. 0.05 crore (Previous Year Rs. 0.05 crore)). In the opinion of the Management, Loans and Advances, other than doubtful, are considered as good and fully recoverable. A provision for non performing advances of Rs. 4.50 crore (Previous Year Rs. 3.15 crore) is made in accounts in accordance with prudential norms prescribed by the Reserve Bank of India for Non-Banking Financial Companies. Advances recoverable in cash or kind inculde an amount Rs. 15 crore (Previous Year Rs. Nil) considered to be a non performing asset for which adequate provision has been made in accordance with RBI prudential norms.
4 5 6
7
(Rs. in crore) As at March 31, 2007 SCHEDULE “H” CURRENT LIABILITIES AND PROVISIONS CURRENT LIABILITIES Sundry Creditors (Other than SSI) Other Liabilities Bank Overdraft Interest Accrued But Not Due Investor Education and Protection Fund Unclaimed Dividend Unclaimed Fixed Deposit 41.45 234.47 23.99 1.68 4.78 0.10 306.47 PROVISIONS Provision for Wealth Tax (Net) Provision for Non Performing Assets Provision for Diminution in Value of Investmentst Provision for Leave Encashment Provision For Gratuity Provision for Unexpired Risk Proposed Dividend on Shares Provision for Dividend Tax 42.40 54.69 5.11 0.19 102.39 As at March 31, 2006
0.23 4.50 8.50 1.75 294.85 85.97 14.61 410.41 716.88
0.09 3.15 0.08 3.68 34.83 71.32 10.00 123.15 225.54
NOTES:
1) 2)
Investor Education and Protection Fund does not include any amounts, due and outstanding, to be deposited to said fund. Based on the information available with the company, there are no dues outstanding for a period exceeding 30 days as at March 31, 2007 (Previous Year Rs. Nil) in respect of small scale industries, as defined under clause (j) of section 3 of the Industries (Development and Regulation) Act, 1951.
79
Reliance Capital Limited
31, 2007 SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31 , 200 7 (Rs. in crore) 2006 - 07 SCHEDULE “I” MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) Preliminary Expenses Add: Incurred during the year Less: Written off during the year Deferred Revenue Expenditure Add: Incurred during the year Less: Written off during the year 2005 - 06
4.05 0.01 4.06 2.16 1.19 0.97 5.03
3.57 0.48 4.05 3.35 1.19 2.16 6.21
SCHEDULE “J” OPERATING OTHER INCOME OPERATING & OTHER INCOME Lease Rentals Less: Lease Equalisation (Net) Lease Finance Charges Dividends on : Long Term Investments Stock in Trade Interest & Finance Income on : Long Term Investments (Tax Deducted at Source Rs. 15.3 crore, Previous Year Rs. 0.48 crore) Others (Tax Deducted at Source Rs. 14.13 crore, Previous Year Rs. 2.55 crore) Profit on sale of (Net): Long Term Investments Stock in Trade Margin on Sale of Foreign Currency Commitment Charges Profit on Share of Partnerships Firms (Refer Note No. 17 of Schedule "N") Investment Management and Advisory Fees Trustee / Portfolio Management Fees Premium & Commission Earned Commission and Brokerage Earned Profit on Sale of Fixed Assets (Net) 12.31 11.97 0.34 0.01 43.61 23.35 20.26 0.24
38.23 0.46 38.69 227.94
10.31 10.05 20.36 155.85
116.97
12.32
344.91 514.77 15.99 530.76 1.72 1.07 1.78 178.82 13.63 914.32 116.92 0.01 413.70 43.53
168.17
457.23 89.42 0.05 164.38 22.86 1.23
80
Reliance Capital Limited
31, 2007 SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31 , 200 7 (Rs. in crore) 2006 - 07 Profit on Securities Option Trading Bad Debts Recovered Excess Provision Written Back Credit Balance Written Back (Net) Rent Revenues from Specialty Services ( Net ) Miscellaneous Income 5.68 0.01 0.03 0.24 4.41 2.78 1.73 2 157.86 SCHEDULE “K” INTERES CHARGES INTEREST & FINANCE CHARGES Interest On Others 2005 - 06 0.90 1.38 0.57 947.05
2.21 40.49 42.70
45.20 45.20
“L” SCHEDULE “L” ADMINISTRATIVE TRATI OTHER EXPENSE XPENSES ADMINISTRATIVE AND OTHER EXPENSES Payments to and provisions for employees Salary, Bonus etc. Contribution to Provident Fund & other funds Staff Welfare & Other Amenities Rent Rates and Taxes Repairs and Maintenance Buildings Others Electricity Legal & Professional Fees Membership & Subscription Insurance Traveling and Conveyance Postage, Telegram and Telephones Claims Incurred (Net) Premium paid on Reinsurance Ceded Commission and Brokerage paid Reserve for Unexpired Risk Loss on Sale of Long term Investments (Net) Loss on Securities Option Trading (Net) Loss on Securities & Commodities Futures Trading Auditor's Remuneration (Refer Note No. 16 of Schedule "N") Directors' Sitting Fees Donation Marketing and Publicity Expenses Provision for Non Performing Assets (Net) Balances Written off (Net) Miscellaneous Expenses
117.61 8.74 20.87 147.22 20.42 0.45 0.70 74.74 1.08 26.08 1.73 1.03 15.15 23.26 173.18 410.10 49.22 260.06 1.46 0.86 0.24 0.14 26.08 1.35 1.22 52.60 1 141.15 1 288.37
36.89 2.65 5.03 44.57 3.16 0.32 8.92 0.50 14.57 1.99 0.41 6.38 4.24 34.44 109.26 8.91 1.57 0.04 0.43 0.36 0.16 0.20 9.79 0.15 0.20 9.12 215.12 259.69
81
Reliance Capital Limited
A C C O U N T I N G P O L I C I E S O N C ONSOL ID A T E D A C C OUNT S SCHEDULE “M” ACCOUNTING POLICIES rinciples Consolid onsolidation A. Principles of Consolidation The consolidated financial statements relate to Reliance Capital Limited ('the Company'), its subsidiary companies including partnership firm and its associates. The consolidated financial statements have been prepared on the following basis: i) The financial statements of the Company and its subsidiary companies including partnership firm have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses. ii) The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the Company's separate financial statements. iii) The difference between the cost of investment in the subsidiary companies over the net assets as on the date of acquisition is recognised in the financial statements as Goodwill or Capital Reserve as the case may be. iv) The difference between the proceeds from disposal of investment in a subsidiary and the carrying amount of its assets less liabilities as of the date of disposal is recognised in the consolidated statement of Profit and Loss account as the profit or loss on disposal of investment in subsidiary. v) Minority Interest's share of net profit of consolidated subsidiaries for the year is identified and adjusted against the income of the group in order to arrive at the net income attributable to shareholder's of the Company. vi) Minority Interest's share of net assets of consolidated subsidiaries is identified and presented in the consolidated balance sheet separate from liabilities and the equity of the Company's shareholders. vii) The financial statements of the Company and its associates have been combined on the basis of equity method, whereby the investment is initially recorded at cost, identifying any goodwill / capital reserve arising at the time of acquisition. The carrying amount of the investment is adjusted thereafter for post acquisition change in the Company's share of net assets of the associate. Unrealised profits and losses resulting from transactions between the Company and the associates are eliminated to the extent of the Company's interest in the associate. Unrealised losses are not eliminated if and to the extent the cost of the transferred asset cannot be recovered. The consolidated statement of profit and loss reflects the Company's share of operations of the associate. B. Other Accounting Policies i) Basis of Preparation of Financial Statements The financial statements have been prepared under the historical cost convention method, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, as adopted consistently by the Company. ii) Use of Estimates The preparation of financial statement is in conformity with Generally Accepted Accounting Principles (GAAP) and requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual result could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. iii) Revenue Recognition a) Interest Income: Interest Income is recognized in the profit and loss account as it accrues except in the case of non performing assets ("NPAs") where it is recognized, upon realization, as per the prudential norms of RBI. b) Dividend Income: Dividend Income is recognized when the right to receive payment is established. c) Lease Finance: Income from leased assets is accounted for in the year in which lease rentals fall due, by applying the interest rate implicit in the lease to the net investment in the lease during the period.
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Reliance Capital Limited
CONSOL OUNTS (Cont ontd...) A C C OUNTING POL ICIE S ON C ONSOL ID A TED A C C OUNT S - (C ont d...) d) Discount on Investments: The difference between the acquisition cost and face value of debt instruments is recognized as interest income over the tenor of the instrument. erenc demption Pr Investments Preference Shares: e) Redemption Premium on Investment s in Preference Shares: Redemption premium on investments in preference shares is recognised as income over tenor of the investment. Inv Manag anagement Fees: f) Investment Management Fees: Investment management fees are computed in accordance with Investment Management Agreement and SEBI Regulations based on Asset Under Management/Net Asset Value confirmed by Reliance Mutual Fund Schemes. ortf tfolio Manag anagement Fees: g) Por tfolio Management Fees: Portfolio management fees are computed in accordance with Portfolio Management Agreements and SEBI Regulations. h) Profit / Loss on Sale of Investment: Profit or loss on sale/redemption of securities is recognized on trade date basis and includes effect on accumulated fair value changes, previously recognized, for specific investments sold / redeemed during the year and accounted reckoning the average cost of the Investments. i) rusteeship Remuner emuneration: Trusteeship Remuneration: Trusteeship remuneration income is recognized on the basis of Unit Capital of the Fund as per the terms of the Trust Deed subject to maximum of Rs. 0.05 crore per annum. j) Premium: Premium is recognized as income over the contract period or the period of risk whichever is appropriate. Any subsequent revisions to or cancellations of premium are recognized for in the year in which they occur. k) Commission: i) ii) Commission income on reinsurance cessions is recognized as income in the period in which reinsurance premium is ceded. Profit Commission under reinsurance treaties, wherever applicable, is recognized in the year of the final determination of the profits and as intimated by reinsurers. iii) Commission income on money transfer services is recognised on rendering the service at agreed rates. l) i. ii. Reinsurance: Reinsurance is ceded in the year in which the risk commences and recognized over the contract period. Reinsurance inward is accounted to the extent of the returns received from the reinsurers premium received in advanced (Profit / Loss on sale of securities). m) Premium Received in Advance: Premium received in advance represents premium received in respect of policies issued during the year, where the risk commences subsequent to the Balance Sheet date. For oreign Exchang change ansac action: n) Revenue on Foreign Exchange Transaction: Revenue on foreign exchange transactions is recognised at the time of purchase and sale. The income arising from the buying and selling of foreign currencies has been included on the basis of margins achieved. Sales incentive for sale of travelers cheque is recorded on accrual basis in term of underlying agreement. Commission income from sale of package tour recognized on rendering services as per underlying agreement. iv) Claims Incurred: Claims include all expenses directly incurred in relation to their assessment and are net of salvage realized. i) Claims reported and outstanding are provided net of claims recoverable from reinsurance based on intimations received up to the date of finalisation, survey reports, information provided by insured, past experience and other applicable laws. ii) Claims outstanding include provision for claims incurred but not reported (IBNR) and also for claims incurred but not enough reported (IBNER) based on actuarial valuation. eser erv for Unexpir xpire Risk: v) Reserve for Unexpired Risk: Reserve for unexpired risk is made on the amount representing that part of the net premium written which is attributable
83
Reliance Capital Limited
CONSOL OUNTS (Cont ontd...) A C C OUNTING POL ICIE S ON C ONSOL ID ATED A C C OUNT S - (C ont d...) to, and to be allocated to the succeeding accounting periods, subject to the provisions of requirements under section 64V (1) (ii) (b) of the Insurance Act, 1938. vi) Own Fixed Assets All fixed assets are stated at cost less accumulated depreciation after considering lease adjustment account. All costs including financing cost attributable to fixed assets till assets are ready for intended use are capitalised. vii) Assets given on Finance Lease a) All assets given on finance lease on or before March 31, 2001 are capitalised as fixed assets. All assets given on finance lease on or after April 1, 2001 are shown as receivables at an amount equal to net investment in the lease. b) Initial direct costs in respect of leases are charged off in the year in which such costs are incurred. viii) Leasehold Improvements Lease hold improvements are written off over the lease period of the lease assets. ix) Intangible Assets Intangible assets are stated at cost of acquisition less accumulated amortization. Intangible assets are amortised over their estimated useful lives on a straight line basis, commencing from the date the asset is available to the Company for its use. Computer software is amortised over the period of 5 years on straight line basis, other than assets of Reliance General Insurance Company Ltd and Travelmate Services (India) Pvt. Ltd., which are amortised over a period of three years on straight line basis, commencing from the date the asset is available to the Company for its use. x) Depreciation Depreciation is provided as under: a) Assets for own use: i) On Written Down Value method, except for assets of Reliance Gilts Ltd. and Travelmate Services (India) Pvt. Ltd., which are depreciated as per Straight Line Method, at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. ii) In case of Medybiz Pvt. Ltd., computer is depreciated over 3 years and software is depreciated over 2 years on straight line basis. b) Leased Assets: On Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. xi) Impairment of Assets An asset is treated as impaired, when carrying cost of assets exceeds its recoverable amount. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount. xii) Investments Investments are classified into current investments and long-term investments. Current investments are valued, scrip wise, at cost or fair value, whichever is lower. Long-term investments are valued at cost and Provision for diminution is made scrip wise to recognise a decline, other than temporary. Stock sset for Sale xiii) Stock in Trade / Asset Held for Sale Securities held as stock-in-trade are valued scrip wise at book value or fair value whichever is lower. Assets held for sale are valued at cost or market value whichever is lower. xiv) Share Issue Expenses: Issue expenses are adjusted against the securities premium account.
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Reliance Capital Limited
CONSOL OUNTS (Cont ontd...) A C C OUNTING POL ICIE S ON C ONSOL ID A TED A C C OUNT S - (C ont d...) xv) Initial Issue Expenses of Schemes: Initial issue expenses of the schemes of Reliance Mutual Fund incurred upto March 31, 2004 are treated as Deferred Revenue Expenditure and written off over five years in equal installments. However the same incurred on or after April 1, 2004 are charged to Profit & Loss Account in compliance with Accounting Standard (AS-26) on Intangible Assets issued by the Institute of Chartered Accountants of India. xvi) Preliminary Expenditure In case of Reliance Gilts Ltd., preliminary expenses or pre-operative expenses are amortised over a period of five years after the commencement of business. xvii) Employee Retirement Benefits Company's contribution to Provident Fund and Superannuation Fund are charged to Profit and Loss Account. Gratuity and Leave Encashment benefits are charged to Profit and Loss Account on the basis of actuarial valuation. oreign Currency ansac urrenc actions xviii) Foreign Currency Transac tions a) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction. b) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts has been recognised over the life of the contract. c) Non monetary foreign currency items are carried at cost. d) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets. xix) Expenses of Management i) ii) Expenses relating to insurance business is allocated on the basis of net premium written to the Revenue Account(s). Expenses relating to investment activities of shareholder's fund are charged to the Profit & Loss Account.
Borro Cost osts xx) Borrowing Cost s Borrowing costs, which are directly attributable to the acquisition/construction of fixed assets, till the time such assets are ready for intended use, are capitalised as part of the cost of the assets. Other borrowing costs are recognised as an expense in the year in which they are incurred. Derivativ atives Commodit Hedging ansac ommodity actions xxi) Financial Derivatives and Commodity Hedging Transactions Financial derivatives and commodity hedging transaction are accounted for on a mark to market basis. Payments of margin requirements on this contract are recognised on the balance sheet. xxii) Earning Per Share The basic earnings per share is computed by dividing the net profit / loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earning per share comprises the weighted average number of shares considered for deriving earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that reduce profit / loss per share are included. for Curr urrent Deferr erre Fring Benefit ringe xxiii) Provisions for Current Deferred Tax and Fringe Benefit Tax Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred
85
Reliance Capital Limited
CONSOL OUNTS (Cont ontd...) A C C OUNTING POL ICIE S ON C ONSOL ID ATED A C C OUNT S - (C ont d...) tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised. Provision for Fringe Benefit Tax has been recognized on the basis of a harmonious, contractual interpretation of the Income Tax Act, 1961. Conting ontingent Conting ontingent sset ets xiv) Provisions, Contingent Liabilities and Contingent A ssets Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S SCHEDULE “N” NOTE TES CONSOLIDA ONSOLID OUNTS NOTES TO THE CONSOLIDATED ACCOUNTS 1. Contingent Liabilities and Commitments (As certified by the management) As at March 31, 2007 LIABILITIES: CONTINGENT LIABILITIES i) Guarantees to Banks and Financial Institutions on behalf of third parties ii) Claims against the Company not acknowledged as debt (Sales Tax/ Income Tax) (The Income Tax Assessments have been completed up to Assessment Year 2004-05.) (Rs. in crore) As at March 31, 2006
56.06 8.91
69.62 0.11
iii) Claims outstanding COMMITMENTS iv) Estimated amount of contracts remaining to be executed on capital account (net of advances) v) Uncalled amount on Investment
142.33
71.35
9.05 22.02
0.35 -
2. In respect of preferential allotment made on July 19, 2005 interalia to AAA Enterprises Pvt. Ltd. 2 17 00 000 equity warrants were outstanding as on March 31, 2006 on which Rs. 22.80 per warrant was paid. The Company has allotted 2 17 00 000 equity shares of the face value of Rs. 10 each at a premium of Rs. 218 per share against conversion of warrants to equity shares as on January 30, 2007. The Company has received the balance Rs. 445.28 crore (Rs. 205.20 per share) and has utilised the same for general corporate purposes. This disclosure is made in compliance of clause 13.5A of SEBI (DIP) Guidelines 2000. 3. (a) In terms of the Scheme of Amalgamation & Arrangement ('Scheme') approved by orders dated June 23, 2006 of Hon'ble High Court of Gujarat at Ahmedabad and June 22, 2006 of Hon'ble High Court of Judicature at Bombay, Reliance Capital Ventures Limited ("RCVL") - (whose core business is financial services) has been amalgamated with the Company with effect from July 17, 2006. (b) The amalgamation has been accounted for under the "Pooling of Interest Method" as prescribed by Accounting Standard 14 (AS-14) "Accounting for Amalgamation" issued by the Institute of Chartered Accountants of India. (c.) In accordance with the said Scheme: (i) All the assets (other than shares of the Company held by "RCVL") debts, liabilities, duties and obligations of "RCVL" have
86
Reliance Capital Limited
NO TE S T O THE C ONSOL ID A TED A C C OUNT S been vested in the Company with effect from July 17, 2006 and have been recorded at their respective book values under the pooling of interest method of accounting for amalgamation. There were no difference in the accounting policies of "RCVL" and the Company. (ii) 6 11 56 521 equity shares of Rs. 10 each have been alloted to the shareholders of "RCVL" in the ratio of 5 equity shares of Rs. 10 each of the Company for every 100 equity shares of Rs.10 each of "RCVL". The Company's paid up capital has accordingly increased by Rs. 1.07 crore. These equity shares shall rank pari-passu with the existing equity shares of the Company. (iii) The investment in the equity share capital of the Company as appearing in the books of accounts of “RCVL” (i.e. 6 00 89 966 equity shares) have been cancelled. (iv) In accordance of the said scheme any excess / shortfall of the net assets value taken over by the Company over the paid up value of equity shares to be issued and allotted has been transferred to General Reserve. (v) The computation of the amount transferred to General Reserve is as under: (Rs. in crore) Book Value of Assets Fixed Assets Investment Net Current Assets 1.03 26.00 (0.60) 0.46 0.05 25.92 61.16 (60.09) 1.07 Amount credited to General Reserve on Amalgamation 24.85
Less : Accumulated Depreciation Less : Capital Reserve Book Value of Net Assets taken over Less: Equity Shares issued to "RCVL" shareholders (6 11 56 521 equity shares of Rs. 10 each) Less:Cancellation of investment of RCVL in RCL
(d) In view of the Amalgamation, "RCVL" has waived its entitlement, to receive dividend, in respect of its holding in 6 00 89 966 equity shares of Rs. 10 each of the Company, which has been cancelled in terms of the scheme. 4. Travelmate Services (India) Pvt. Ltd., a Subsidiary Company since November 29, 2006. Travelmate Services (India) Pvt. Ltd. ('the Company') was promoted by Kuoni Travels India Pvt. Ltd. The Company was incorporated on November 28, 2002. The Company is licensed by the Reserve Bank of India to operate as "Full Fledged Money Changer" (FFMC). During the period, the money transfer division of Kuoni was demerged on going concern basis to the Company with effect from April 1, 2006 pursuant to the Hon’ble Bombay High Court Order dated August 25, 2006. Accordingly all assets, title, interests, debts, contingent liabilities, duties and obligations of every kind, charges, mortages, licenses, registrations, etc of the money transfer division as indentified, agreed and certified by the Board of Directors of Kuoni and the Company, were transferred to the Company at the respective book values as at April 1, 2006. Accordingly, the Company acts as an agent of Western Union, Ireland ('the Principal') for the money transfer service. 5. Change in Accounting Policy in case of Reliance General Insurance Company Ltd. (RGIC): During the year ended March 31, 2007, RGIC has changed accounting policy relating to recognition of reinsurance commission income. In the earlier year RGIC used to recognize commission income over the policy contract period. Had RGIC continued to follow accounting policy followed in the earlier year the commission transferred to shareholder account, operating profit, Profit Before Tax would have been lower by Rs. 30 crores and unearned commission would have been higher by Rs. 30 crores (Refer revised accounting policy for reinsurance commission income - Note no. B (iii) (k) of Schedule “M”).
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S 6. Assets given on lease on or after April 1, 2001 i) articulars ticular Par ticulars To tal Not later than one year Later than one year and not later than five years – (–) – (–) – (–) – (–) – (–) (Rs. in crore) Later than five years
Future lease rental receivables
– (0.60)
– (0.60) – (1.10) – (1.70) – (0.02) – (1.68)
– (–) – (–) – (–) – (–) – (–)
Add: Unguaranteed residual value
– (1.10)
Gross Investments in lease
– (1.70)
Less: Unearned finance income
– (0.02)
Present value of the minimum lease rentals receivables Figures in brackets represent previous year figures. ii) General description of lease arrangements: a) Assets are generally given on lease for a period of five years.
– (1.68)
b) Lease rentals are charged on the basis of agreed rate of interest. 7. Assets taken on operating lease: (Rs. in crore) articulars ticular Par ticulars To tal Not later than one year 3.12 (1.92) Later than one year and not later than five years 8.06 (6.47) Later than five years
Future liabilities in respect of car/premises taken after April 1, 2001 Figures in brackets indicate previous year figures 8. Managerial Remuneration i)
15.57 (14.00)
4.39 (5.61)
The Company has been advised that the computation of net profits for the purpose of managerial remuneration under section 349 of the Companies Act, 1956 need not be enumerated, since no commission by way of percentage of profit is payable for the year to any of the Directors / Manager of the Company. Payment to and provision for employees include Managerial Remuneration by way of: (Rs. in crore) articulars ticular Par ticul ar s i) ii) iii) Salaries Perquisites Contribution to Provident Fund and Superannuation Fund Total * inclusive of arrears a) Information relating to payment to Manager/Directors does not include payment for gratuity and leave encashment which is provided for group of employees on an overall basis. 2006-2007 0.88 0.15 0.13 1.16 2005-2006 1.54 0.17 0.08 *1.79
ii)
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S 9. Miscellaneous Expenses referred to in Schedule 'L' include: i) Net Prior Period items Rs. 1.73 crore (net debit) (Previous year Rs. 0.04 crore (net credit)). ii) Sales tax paid (net) Rupees 1 156 (Previous Year Rupees 5) 10. The Company's stake in share capital of DTDC Courier & Cargo Ltd., Menon & Menon Pvt. Ltd. and Gini & Jony Apparels Pvt. Ltd. is in excess of 20% each. These investments have been made by the Company for a short term with an intention to sell these investments in the future. In accordance with para 7 of Accounting Standard (AS-23) on Accounting for Investments in Associates in Consolidated Financial Statements issued by The Institute of Chartered Accountants of India, these investments have not been accounted for as associates in the preparation of consolidated financial statements. 11. In March 2007 the Company purchased non performing loans aggregating to Rs. 11.61 crore. In accordance with the requirements of RBI circular: DBOD.NO.BP. BC. 16/21.04.048/2005-06 the Company has classified these as standard assets. None of these accounts were restructured during the year and the aggregate outstanding at March 31, 2007 was Rs. 11.61 crore. elat ate Par Disclosur art osures 12. Related Par ty Disclosures List of related parties i) Promoters AAA Enterprises Pvt. Ltd. (Holding Company) (w.e.f. February 22, 2007)* Reliance Innoventures Pvt. Ltd. (Formerly Reliance Innoventures Ltd.) (w.e.f. February 22, 2007) (Ultimate Parent Company) Shri Anil D. Ambani Smt. Tina A. Ambani Smt. Kokilaben D. Ambani Master Jai Anmol A. Ambani Master Jai Anshul A. Ambani Hansadhwani Trading Co. Pvt. Ltd. ii) Associates Reliance Land Pvt. Ltd. Reliance Share & Stock Brokers Pvt. Ltd. WorldTel Holding Ltd. Ammolite Holdings Ltd. Reliance Asset Reconstruction Co. Ltd. Viscount Management Services Ltd. (Ceased to be an Associate on March 28, 2007) Viscount Management Services (Alpha) Ltd. (Ceased to be an Associate on March 28, 2007) Reliance Life Insurance Co. Ltd. (Ceased to be an Associate on March 28, 2007) Reliance Capital Ventures Ltd. (Ceased to be an Associate on July 17, 2006)
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S ell Subsidiaries iii) Fellow Subsidiaries Reliance Communications Ltd. (Formerly Reliance Communications Ventures Ltd.)** Reliance Webstores Ltd. Reliance Communications Infrastructure Ltd. ** Reliance Telecom Ltd. ** Matrix Innovations Ltd. Gateway Systems (India) Ltd. Reliance Natural Resources Ltd.** iv) Key Managerial Personnel a) Shri V. R. Mohan b) Smt Geeta Chandran c) Shri K. A. Somasekharan Company Secretary & Manager Manager, Reliance Capital Asset Management Ltd. President & CEO, Reliance General Insurance Company Ltd.
ansac actions ye relate parties: elat v) Transactions during the year with related parties: (Rs. in crore) articulars ticular Par ticulars Holding company ell Fellow Subsidiaries Associates Key Management Personnel To tal
Equity Shares a) Issued /converted during the year 494.76 (-) quity arrant ants Equity Warrant s a) Issued during the year (-) b) converted into shares 49.48 (-) c) Outstanding as at March 31, 2007 Unsecur ecure Loans fr Unsecured Loans from Corporate orporat Bodies Corporate a) Taken during the year (-) b) Repaid during the year (-) Leased Assets (Gross Block) a) Leased Assets sold during the year b) Assets on Lease as at March 31, 2007 (-) (-) (16.76) (-) (-) (-) (16.76) (-) (-) (1 240.00) (-) (-) (-) (1 240.00) (-) (-) (-) (-) (93.48) (-) (49.48) (-) (-) (-) (93.48) 49.48 (-) (49.48) (-) (1 808.04) (-) 494.76 (1 808.04)
90
Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S (Rs. in crore)
articulars ticular Particulars
Holding company
ell Fellow Subsidiaries
Associates
Key Management Personnel
Total
Investments a) Subscribed / Purchased during the year b) Sold / Redeemed during the year c) Brokerage paid during the year (-) (-) (-) d) Balance as at March 31, 2007 Stock-in-trade a) Subscribed/ Purchased during the year b) Redeemed/Sold during the year (-) (-) c) Brokerage paid during the year (-) d) Balance as at March 31, 2007 Sundry Debtors Balance as at March 31, 2007 Interest Accrued on Investments Balance as at March 31, 2007 eivabl ets Lease eceivables for sset Receivables for Assets on Lease a) Repaid during the year (-) b) Balance as at March 31, 2007 Loans to Others a) Given during the year (-) b) Returned during the year (-) c) Balance as at March 31, 2007 (-) d) Interest Receivable on above (-) 1 548.45 (-) (-) 1 548.45 (-) 4.67 (-) 584.19 (875.74) 592.59 (36.33) 838.21 (846.61) 6.15 (-) (-) (-) (-) (-) 2 132.64 (875.74) 592.59 (36.33) 2 386.66 (846.61) 10.82 (-) (-) 1.19 (-) (-) (4.69) (1.68) (-) (-) 1.19 (4.69) (1.68) (-) (-) (-) 5.26 (-) (-) (-) (2.00) 0.25 (1.07) (-) 203.64 (0.04) (583.49) (-) (-) (-) (-) (-) (-) (-) (2.00) 0.25 (1.07) (-) 208.90 (0.04) (583.49) (-) (-) 1 686.97 (-) (-) 211.77 (-) 285.95 (129.05) 0.05 (15.01) 0.83 (0.52) 42.89 (1 293.63) (-) (-) (-) (-) 285.95 (129.05) 1 687.02 (15.01) 0.83 (0.52) 254.66 (1 293.63)
91
Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S (Rs. in crore)
articulars ticular Particulars
Holding company
ell Fellow Subsidiaries
Associates
Key Management Personnel
Total
Advances recoverable in cash or in kind a) Given during the year (-) b) Returned during the year Rs. 14 400.
# ##
(-) (-) (-) (-)
(0.02) (-) (0.02) (-)
(-)
##
(0.02)
##
(-) (-) (-)
() 0.04 (0.04) 0.01 (0.01)
#
(#) 0.04 (0.06) 0.01 (0.01)
(Previous year Rs. 20 864)
c)
Balance as at March 31, 2007
d)
Interest receivable as at March 31, 2007
urrent Current Liabilities a) Sundry Creditors Balance as at March 31, 2007 Income a) Lease Rentals (-) b) Interest & Finance Income Rs. 8 136 c) Sale of Fixed Assets (-) (-) d) Rent (-) e) Miscellaneous Income *Rs. 3 171 Expenditure a) Interest on Others (-) b) Rent (-) c) Insurance (-) d) Payments to and provisions for employees e) Professional fees (-) (-) f) Miscellaneous (-) (-) 0.14 (-) (-) (-) 0.50 (-) 0.64 (-) (37.75) (0.06) (-) (-) (-) (-) (-) (-) (-) 1.16 (1.59) (-) (-) (37.75) 0.14 (0.06) (-) 1.16 (1.59) 0.50 (-) 0.64 (-) (-) (-) 160.96 (-) (-) 4.41 (-) * (-) (4.90) 62.33 (116.41) (0.02) (-) (0.08) (-) * (-) (-) (-) (-) (4.90) 223.29 (116.41) (0.02) 4.41 (-) (0.08) (-) (-) (0.06) (-) (0.06)
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S (Rs. in crore)
articulars ticular Par ticulars
Holding company
ell Fellow Subsidiaries
Associates
Key Management Personnel
Total
ontingent Liability Contingent Liability a) Guarantees to Banks and Financial Institutions on behalf of third parties * AAA Enterprises Pvt. Ltd. was an Associate in previous year, is now the Holding Company w.e.f. February 22, 2007. ** Reliance Communication Infrastructure Ltd., Reliance Telecom Ltd., Reliance Communications Ltd. and Reliance Natural Resources Ltd. which were Associates in the previous year, are now Fellow Subsidiary Companies. Note:1 2 Figures in bracket indicate previous year figures. Expenses incurred towards public utilities services such as telephone and electricity charges has not been considered for related party transaction. 3 Previous year transactions with parties that have become related parties in the current year have been excluded in the above mentioned table as the relationship did not exist. 4 In addition to the above, Director Sitting Fees of Rs. 40 000. (Previous Year Rs. 0.01 crore) has been paid to Shri Anil D. Ambani, an individual having significant influence. Significant transactions with related parties: i) ii) Equity Shares includes Rs. 494.76 crore (Previous Year Rs. 1 808.04 crore) converted / issued to AAA Enterprises Pvt. Ltd. Equity Warrants of Rs. 49.48 crore held by AAA Enterprises Pvt. Ltd. have been converted to equity shares in current year at the rate of Rs. 228 per share (premium Rs. 218 per share) issued to AAA Enterprises Pvt. Ltd. iii) Equity Warrants as at March 31, 2007 includes Rs. Nil (Previous Year Rs. 49.48 crore) outstanding warrants held by AAA Enterprises Pvt. Ltd. iv) Unsecured Loans from Bodies Corporate includes Rs. Nil (Previous Year Rs. 1 240.00 crore) repaid to Reliance Communications Infrastructure Ltd. v) vi) Leased Assets (Gross Block) includes Rs. Nil (Previous Year Rs. 16.76 crore) sold to Reliance Communications Infrastructure Ltd. Investments purchased includes in associates 159.84 crore (Previous Year Rs. 54.72 crore) subscribed to debentures of Viscount Management Services (Alpha) Ltd. and 119.88 crore (Previous Year Rs. 52.75 crore) subscribed to debentures of Viscount Management Services Ltd. vii) Investment sold lying in fellow subsidiaries, Rs. 1 548.45 crore (Previous Year Rs. Nil) deep discount bonds to Reliance Communications Ltd. & Investment sold in Associates comprise Rs. 0.03 crore (Previous Year Rs. Nil) in shares to Reliance Land Pvt. Ltd. and Rs. 0.02 crore (Previous Year Rs. Nil) in shares to Reliance Share & Stock Brokers Pvt. Ltd. viii) ix) Investments includes Rs. 0.83 crore (Previous Year Rs. 0.52 crore) brokerage paid to Reliance Share & Stock Brokers Pvt. Ltd. Investments as at March 31, 2007, includes Rs. 209.05 crores(Previous Year Rs. 193.54 crores) in shares of Reliance Communications Ltd., Rs. Nil (Previous Year Rs. 803.94 crores) in deep discount bonds of Reliance Communications Infrastructure Ltd., Rs. 10.00 crores (Previous Year Rs. 5.00 crores) in shares of Reliance Land Pvt. Ltd., Rs. 9.00 crores (Previous Year Rs. 9.00 crores) in shares of Reliance Share & Stock Brokers Pvt. Ltd. (-) 0.12 (-) 0.35 (32.85) (-) 0.47 (32.85)
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S x) xi) Stock in Trade redeemed / sold Rs. Nil (Previous Year Rs. 2.00 crore) debentures by Reliance Land Pvt. Ltd. Stock in Trade includes Rs. 0.25 crore (Previous Year Rs. 1.07 crore) brokerage paid to Reliance Share & Stock Brokers Pvt. Ltd. xii) Sundry Debtors as at March 31, 2007 includes Rs. 5.26 crore (Previous Year Rs. Nil) due from Reliance Communications Infrastructure Ltd., Rs. 203.61 (Previous Year Rs. 0.04 crore) due from Reliance Share and Stock Brokers Pvt. Ltd., xiii) Interest Accrued on Investment as at March 31, 2007 Rs. Nil (Previous Year Rs. 583.49 crore) due from Reliance Communications Infrastructure Ltd. xiv) Receivables for Assets on Lease includes Rs. 0.83 (Previous Year Rs.1.70 crore) repaid by Reliance Communications Infrastructure Ltd. and Rs. 0.35 crore (Previous Year Rs. 1.07 crore) repaid by Reliance Telecom Ltd. xv) Receivables for Assets on Lease as at March 31, 2007 includes Rs. Nil (Previous Year Rs. 0.83 crore) receivable for assets leased to Reliance Communications Infrastructure Ltd. and Rs. Nil (Previous Year Rs. 0.36 crore) receivable for assets leased to Reliance Telecom Ltd. xvi) Loans to Others lying in fellow subsidiaries, includes Rs. 1 548.45 crore (Previous Year Rs. Nil) given to Reliance Communications Infrastructure Ltd. xvii) Loans to Others lying in Associates, Rs. 497.16 crore (Previous Year Rs. 781.41 crore) given to Reliance Land Pvt. Ltd. and Rs. 60.00 crore (Previous Year Rs. 94.30 crore) given to Reliance Share & Stock Brokers Pvt. Ltd. xviii) Loans to Others lying in Associates, Rs. 571.14 crore (Previous Year Rs. Nil) repaid by Reliance Land Pvt. Ltd., Rs. Nil (Previous Year Rs. 33.30 crore) repaid by Reliance Share & Stock Brokers Pvt. Ltd. xix) Loans to Others as at March 31, 2007, lying in fellow subsidiaries, includes Rs. 1 548.45 crore (Previous Year Rs. Nil) given to Reliance Communications Infrastructure Ltd. xx) Loans to Others as at March 31, 2007, lying in Associates, Rs. 704.43 crore (Previous Year Rs. 778.41 crore) given to Reliance Land Pvt. Ltd. and Rs. 106.75 crore (Previous Year Rs. 68.20 crore) given to Reliance Share & Stock Brokers Pvt. Ltd. xxi) Interest Receivable on Loans as at March 31, 2007 lying in fellow subsidiaries, includes Rs. 4.67 crore (Previous Year Rs. Nil) due from Reliance Communications Infrastructure Ltd. xxii) Interest Receivable on Loans as at March 31, 2007, lying in Associates, Rs. 5.60 crore (Previous Year Rs. Nil ) due from Reliance Land Pvt. Ltd. xxiii) Advance recoverable in cash or kind lying in Associates, includes Rs. Nil (Previous Year Rs. 0.02 crore) advanced to Reliance Capital Ventures Ltd. xxiv) xxv) Advance recoverable in cash or kind includes Rs. 14 400 (Previous Year Rs. 20 864) repaid by Shri V. R. Mohan. Advance recoverable in cash or kind as at March 31, 2007, lying in Associates, includes Rs. Nil (Previous Year Rs. 0.02 crore) receivable from Reliance Capital Ventures Ltd. xxvi) Advance recoverable in cash or kind as at March 31, 2007, includes Rs. 0.04 crore (Previous Year Rs. 0.04 crore) receivable from Shri V. R. Mohan. xxvii) Advance recoverable in cash or kind as at March 31, 2007, includes Rs. 0.01 crore (Previous Year Rs. 0.01 crore) interest receivable from Shri V. R. Mohan. xxviii) Sundry Creditors as at March 31, 2007 lying in Associates, includes Rs. Nil (Previous Year Rs. 0.06 crore) payable to Reliance Capital Ventures Ltd.
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S xxix) Lease Rentals income lying in Associates, includes Rs. Nil (Previous Year Rs. 3.32 crore) received from Reliance Communications Infrastructure Ltd. and Rs. Nil (Previous Year Rs. 1.58 crore) from Reliance Telecom Ltd. xxx) Interest and Finance Income, lying in fellow subsidiaries, includes Rs. 153.09 crore (Previous Year Rs. 113.28 crore) received from Reliance Communications Infrastructure Ltd. xxxi) Interest and Finance Income, lying in Associates, Rs. 17.98 crore (Previous Year Rs. Nil) received from Viscount Management Services Ltd., Rs. 26.77 crore (Previous Year Rs. Nil) received from Viscount Management Services (Alpha) Ltd., Rs. 8.39 crore (Previous Year Rs. 0.31 crore ) received from Reliance Land Pvt. Ltd., Rs. 8.73 crore (Previous Year Rs. 2.82 crore) received from Reliance Share & Stock Brokers Pvt. Ltd. xxxii) Sale of Fixed Assets Lying in Associates Rs. Nil (Previous Year Rs. 0.02 crore) sold to Reliance Communications Infrastructure Ltd. xxxiii) Rent income lying in Associates includes Rs. 4.41 crore (Previous Year Nil) received from Reliance Communication Infrastructure Ltd. xxxiv) Miscellaneous income lying in Associates, includes Rs. Nil (Previous Year Rs. 0.04 crore) received from Reliance Share & Stock Brokers Pvt. Ltd. & Rs. Nil (Previous Year Rs. 0.04 crore) received from Reliance Telecom Ltd. xxxv) Interest on Others lying in Associates, Rs. Nil (Previous Year Rs. 37.75 crore) paid to Reliance Communications Infrastructure Ltd. xxxvi) Rent Expenditure lying in fellow subsidiaries / associates, Rs. 0.14 crore (Previous Year Rs. Nil) paid to Reliance Communications Infrastructure Ltd. & Rs. Nil (Previous Year Rs. 0.06 crore) paid to Reliance Capital Ventures Ltd. xxxvii) Payments to and provisions for employees includes Rs. 0.25 crore (Previous Year Rs. 0.13 crores) paid to Shri V. R. Mohan, Rs. 0.22 crore (Previous Year Nil) paid to Smt Geeta Chandran, and Rs. 0.69 crore (Previous Year 0.40 crore) paid to Shri K. A. Somasekharan. xxxviii) xxxix) Professional Fees Rs. 0.50 crore (Previous Year Rs. Nil) paid to Reliance Communications Infrastructure Ltd. Miscellaneous Expenditure lying in fellow subsidiaries, includes Rs. 0.62 crore (Previous Year Rs. Nil) paid to Reliance Communications Infrastructure Ltd. xl) Contingent Liability for Bank Guarantee given to Bank's and Financial institution lying in Fellow subsidiaries / associates includes Rs. 0.08 crore (Previous Year Rs. 0.12 crore) for Matrix Innovations Pvt. Ltd., Rs. 0.03 crore (Previous Year Rs. 0.04 crore) for Reliance Webstores Pvt. Ltd., Rs. 0.35 crore (Previous Year Rs. 13.50 crore) for Reliance Share and Stock Brokers Pvt. Ltd., and Rs. Nil (Previous Year Rs. 16.63 crore) for Reliance Telecom Ltd. 13. Basic and Diluted Earning Per Share i) For the purpose of calculation of Basic Earning Per Share the following amounts are considered: (Rs. in crore) articulars ticular Par ticulars a) Amounts used as the numerators Net Profit after Share of Profit / (Loss) of Associate Less: Preference dividend and tax thereon Net Profit available for equity shareholders b) Weighted average number of equity shares (Nos.) c) Basic Earning Per Share (Rs.) 703.21 703.21 22 76 18 827 30.89 571.37 571.37 18 07 55 943 31.61 2006-07 2005-06
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S ii) For the purpose of calculation of Diluted Earning Per Share the following amounts are considered: (Rs. in crore) articulars ticular Par ticulars a) Amounts used as the numerators Net Profit after Share of Profit / (Loss) of Associate Less: Preference dividend and tax thereon (Previous Year Rs. 5 036) Net Profit available for equity shareholders b) Weighted average number of equity shares (Nos.) c) Diluted Earning Per Share (Rs.) 703.21 703.21 22 76 18 827 30.89 571.37 571.37 21 82 05 943 26.19 2006-07 2005-06
14. The company is organised into following reportable segments referred to in Accounting Standard (AS-17) “Segment Reporting”: (Rs. in crore) Finance & Investments Revenue i) External 898.35 (651.26) ii) Inter Segment 1.66 (0.76) Total Revenue 898.26 (652.02) Result Segment Result (Profit before Tax) 737.36 (550.61) Other Information Information Segment Assets 6 538.74 (4 374.33) Segment Liabilities 1 626.38 (385.30) Capital Expenditure 27.67 (1.37) Depreciation 7.37 23.19 Non-cash expenses other than depreciation Figures in bracket indicate previous year figures Notes: i) As per Accounting Standard (AS-17) on "Segment Reporting", issued by the Institute of Chartered Accountants of India, the Company has reported segment information on the consolidated basis including business conducted through its subsidiaries. (-) 141.27 (89.37) 28.64 (25.75) 7.60 (2.58) 2.01 (1.13) 1.19 (1.19) 738.68 (254.70) 475.28 (95.93) 24.82 (1.84) 4.58 (1.23) (-) (-) 2.94 (-) (-) (-) (-) 7 418.69 (4 718.40) 2 127.36 (506.98) 60.09 (5.79) 13.96 (25.55) 1.19 (1.19) 71.92 (43.77) 2.24 (21.04) (-) 811.52 (615.42) 203.75 (93.49) (-) 203.75 (93.49) 1 055.76 (202.30) 0.09 (0.40) 1 055.85 (202.70) (-) 1.75 (1.16) 1.75 (1.16) 2 157.86 (947.05) (-) 2 157.86 (947.05) Asset Management General Insurance Elimination To tal
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S ii) The reportable Segments are further described below: a) Finance & Investment, b) Asset Management c) General Insurance and d) Others - Foreign exchange, Money transfer, Pharmaceuticals, Healthcare and Logistics iii) Since all the operations of the Company are conducted within India, as such there is no separate reportable geographical segment. 15. Deferred Tax The Company has recognized deferred tax liability of Rs. 7.51 crore as on March 31, 2007. Details are as under: (Rs. in crore) As at March 31, 2007 Deferred tax liabilities Deferr erre ta Related to Fixed Assets sset ets Deferr erre ta Deferred tax A ssets Related to disallowance under Income Tax Act, 1961 Net deferred tax liabilities / (Assets) 16. Auditors’ Remuneration includes: (Rs. in crore) articulars ticular Par ticulars i) ii) iii) iv) Audit Fees Tax Audit Fees In other capacity / Certification Charges Out of Pocket Expenses 2006-07 0.72 0.05 0.09 0.00 2005-06 0.26 0.08 0.01 0.01 6.91 7.51 0.26 0.86 14.42 1.12 As at March 31, 2006
17. In respect of Reliance Capital Partners ("Partnership Firm"), Rs. 1.78 crore profit of Reliance Capital Partners is considered as income of current financial year. The firm was constituted on April 19, 2006 and reconstituted on April 21, 2006. a) The firm consisted of following partners: i) ii) Reliance Capital Ltd. (from April 19, 2006 to March 31, 2007) Reliance Land Pvt. Ltd. (from April 19, 2006 to March 31, 2007)
iii) Sonata Investments Ltd. (from April 19, 2006 to April 21, 2006) iv) Mr. Surendra Pipara (from April 21, 2006 to March 31, 2007) b) Profit Sharing Ratio: The profit is distributed between the partners on weighted average cost of capital. 18. The subsidiary companies / associate companies considered in the consolidated financial statements are as under: Name ountry Country of Incorporation Subsidiar Companies sidiary Subsidiary Companies Reliance Capital Asset Management Ltd. Reliance Capital Trustee Co. Ltd. India India March 31, 2007 March 31, 2007 100% 100% Year Ending Proportion of ownership interest
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S Name ountry Country of Incorporation Reliance General Insurance Company Ltd. Reliance Gilts Ltd. Reliance Venture Asset Management Pvt. Ltd. Reliance Capital Research Pvt. Ltd. (formerly known as Cheetah Global Fund Services Pvt. Ltd.) Reliance Technology Ventures Pvt. Ltd. Travelmate Services (India) Pvt. Ltd. Medybiz Pvt. Ltd. Net Logistics Pvt. Ltd.# Reliance Asset Management (Mauritius) Ltd. Reliance Asset Management (Singapore) Pte. Ltd. Reliance Capital Partners (Partnership Firm) ssociate Companies A ssociate Companies Reliance Land Pvt. Ltd. Reliance Share & Stock Brokers Pvt. Ltd. WorldTel Holding Ltd.* Ammolite Holdings Ltd.* Reliance Asset Reconstruction Co. Ltd. India India Bermuda USA India March 31, 2007 March 31, 2007 December 31, 2004 March 31, 2007 March 31, 2007 50% 50% 47% 50% 49.23% India India India India Mauritius Singapore India March 31, 2007 March 31, 2007 March 31, 2007 March 31, 2007 March 31, 2007 March 31, 2007 March 31, 2007 100% 100% 100% 90% 100% 100% 100% India India India India March 31, 2007 March 31, 2007 March 31, 2007 March 31, 2007 Year Ending Proportion of ownership interest 100% 100% 100% 100%
* The accounts of WorldTel Holding Ltd. and Ammolite Holdings Ltd. have not been considered as the same are under compilation. # Balance 10% Proportion of ownership interest in Net Logistics Pvt. Ltd. is held by Medybiz Pvt. Ltd. Note : Viscount Management Services (Alpha) Ltd. and Viscount Management Services Ltd. were associates during the year. These companies ceased to be associates with effect from March 28, 2007. 19. The Investments of Reliance General Insurance Company Ltd. amounting to Rs. 633.15 crore (Previous Year Rs. 214.93 crore) have been accounted on held till maturity basis in accordance with the Insurance Regulatory & Development Act, 1999 and the regulations framed thereunder read with relevant provisions of Insurance Act, 1938 and Companies Act, 1956. 20. The Miscellaneous Expenditure of all the subsidiaries amounting to Rs. 5.05 crore (Previous Year Rs. 6.21 crore) have been carried to Balance Sheet in view of absence of Securities Premium Account in the respective companies. 21. Since Reliance Gilts Ltd. has not commenced business, expenditure incurred during the year of Rs. 54 640 (Previous Year Rs. 0.48 crore) are treated as pre-operation expenses (included in Preliminary Expenses) and carried to the Balance Sheet. 22. Goodwill of Rs. 10.04 crore (Previous Year Rs. 10.04 crore) arising at the time of acquisition of associates has been included in the carrying amount of investment in associates, as per Accounting Standard (AS-23) on "Accounting for Investment in Associates in Consolidated Financial Statements".
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Reliance Capital Limited
CONSOL NO TE S T O THE C ONSOL ID A TED A C C OUNT S 23. In case of the subsidiaries given below in Sr. No. 1 to 3 Audited Balance Sheet as on March 31, 2007 and for rest (Sr. No. 4 to 6) Audited Balance Sheet as on March 31, 2006 has been considered for recognition of goodwill / capital reserves instead of date of investments as per Accounting Standard (AS-21) on "Consolidation Financial Statements" as there are no significant transaction between the date of investment and date of Balance Sheet. Name of Subsidiaries 1) Reliance Venture Asset Management Pvt. Ltd. 2) Reliance Capital Research Pvt. Ltd. (formerly Cheetah Global Fund Services Pvt. Ltd.) 3) Reliance Technology Ventures Pvt. Ltd. 4) Travelmate Services (India) Pvt. Ltd. 5) Medybiz Pvt. Ltd. 6) Net Logistics Pvt. Ltd. February 23, 2007 November 29, 2006 February 16, 2007 February 16, 2007 Date of Investments October 3, 2006 February 20, 2007
24. (a) Previous year's figures have been reworked, regrouped and reclassified wherever necessary. (b) Figures have been presented in 'crore' of rupees with two decimals in accordance with the approval received from the Company Law Board. Figures less than Rs. 50 000 have been shown at actual in brackets. (c) Figures for the current year include figures of erstwhile Reliance Capital Ventures Ltd. (RCVL) which was amalgamated with the Company with effect from July 17, 2006 and are therefore to that extent are not comparable with those of the previous year. (d) In case of Travelmate Services (India) Pvt. Ltd., the accounts have been prepared for 15 months ended on March 31, 2007.
For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain Mohan V. R. Mohan
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Reliance Capital Limited
FLO FOR CONSOL ID A TED CASH FL O W F OR THE YEAR ENDED MARCH 31, 2007 articulars ticular Par ticul ars 2006-2007 FLO OPERATING ACTIVITIE TIVITIES A. CASH FLOW FROM OPERATING AC TIVITIE S Profit after Share of Profit / (Loss) of Associates 703.21 Adjusted for Minority Interest's Share of Profits Share of Profit of Associates (3.49) Loss on sale of Investment of Associate prof befor ta ofit ore items Net profit before tax and prior period items 699.72 Adjusted for Prior Period Expense (1.73) Depreciation 13.96 Lease Equalisation 11.97 Provision for Tax 111.80 Miscellaneous Expenditure written off 1.19 Provision for Non Performing Assets 1.35 Balances Written off 1.22 (0.01) Miscellaneous Expenditure Credit Balance/ Excess Provision Written Back (0.27) Investments Dividend Income (38.23) Interest (Profit) / Loss on sale of Investment (Net) (514.77) Interest Expenses 42.70 Loss / (Profit) on sale of Fixed Assets (Net) (0.01) (370.83) Operating Profit befor ore Capit Changes apital Operating Profit before Working Capital Changes 328.89 Adjusted for Trade and Other Receivables (2 237.03) Inventories (24.53) Proceeds from / (Repayment of) Short Term Borrowings 1 211.51 Trade Payables 396.73 (653.32) generate fr enerat operations Cash generated from operations (324.43) Interest Paid (31.46) Taxes Paid (47.63) (79.09) Fl befor ore items Cash Flow before prior period items (403.52) Prior Period Expense 1.73 Cash fr (use Operating ye Net Cash from / (used in) Operating Ac tivities during the year (401.79) Fl fr Inv B. Cash Flow from Investing Ac tivities Purchase of Fixed Assets (60.09) Sale of Fixed Assets 0.35 Purchase of Investments (3 103.34) Sale of Investments 3 159.89 Interest Received 38.23 Dividend Received Cash fr (use Inv ye Net Cash from / (used in) Investing Ac tivities during the year 35.04 Fl fr Financing C. Cash Flow from Financing Ac tivities Issue / (Redemption) of Share Capital (including warrants) 445.27 Proceeds from Long Term Borrowings Repayment of Long Term Borrowings Dividend Paid (59.72) Cash fr (use Financing ye Net Cash from / (used in) Financing Ac tivities during the year 385.55 Net increase / (decrease) in Cash and Cash Equivalents ( A + B + C) 18.80 Opening Balance of Cash and Cash Equivalents 24.41 Closing Balance of Cash and Cash Equivalents* (Refer Schedule “G”) 43.21 The previous year’s figures have been regrouped and reclassified wherever necessary. * Fixed deposits with Banks under lien are not considered as cash and cash equivalents. As per our report of even date For CHATURVEDI & SHAH CHATURVEDI Chartered Accountants C. D. Lala Partner Membership No.: 35671 Mumbai Dated: April 23, 2007 For BSR & Co. BSR Co. Chartered Accountants Akeel Master Partner Membership No.: 46768 For and on behalf of the Board Chairman Vice Chairman Directors Company Secretary & Manager Mumbai Dated: April 23, 2007 Anil D. Ambani Amitabh Jhunjhunwala ajendra P. Chital ale Rajendra P. Chitale P. C. P. Jain V. R. Mohan Mohan (Rs. in crore) 2005-2006 571.37 3.59 (0.20) 7.09 581.85 (0.04) 25.55 23.35 33.57 1.19 0.15 0.20 (0.48) (10.31) (155.85) (413.70) 45.20 (1.23)
(452.40) 129.45
(1 306.35) 8.29 (1 072.50) 42.42 (2 (2 (45.20) (33.67) (2
328.14) 198.69)
(78.87) 277.56) 0.04 (2 277.52) (5.87) 1.39 (3 671.12) 3 731.77 13.92 10.31 80.40 2 228.25 20.08 (19.24) (43.74) 2 185.35 (11.77) 36.18 24.41
100
ATTEND TENDANCE SLIP ATTENDANCE SL IP
Reliance Capital Limited
egister Office: ere Registered Office: H Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairane, Navi Mumbai 400 710. PLEASE FILL ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL. Joint shareholders may obtain additional attendance slip at the venue. DP. Id* Client Id* NAME AND ADDRESS OF THE SHAREHOLDER Master Folio No. No. of Share(s) held
I hereby record my presence at the 21st ANNUAL GENERAL MEETING of the Company held on Tuesday, July 3, 2007, at 11:00 a.m., at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020. Signature of the shareholder or proxy *Applicable for investors holding shares in electronic form. ....................................................................................... TEAR HERE .................................................................................................. PROX PROXY FORM
Reliance Capital Limited
egister Office: ere Registered Office: H Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairane, Navi Mumbai 400 710.
DP. Id* Client Id*
Master Folio No. No. of Share(s) held
I/We .................................................................................................................................................................................................... of ........................................................................................................... being a member/members of Reliance Capital Limited hereby appoint ...................................................................................................................................................................................... of ..................................................................................................................................................................................... or failing him ............................................................................................................ of ................................................................................................. as my/our proxy to vote for me/us and on my/our behalf at the 21st ANNUAL GENERAL MEETING to be held on 21st Tuesday, July 3, 2007 at 11:00 a.m., or at any adjournment thereof.
Signed this ......................................... day of ............................................... 2007. * Applicable for investors holding shares in electronic form. NOTE: (1)
Affix Re. 1/revenue stamp
The proxy in order to be effective should be duly stamped, completed and signed and must be deposited at the Registered Office of the Company not less than 48 hours before the time for holding the aforesaid meeting. The Proxy need not be a member of the Company. Members holding shares under more than one folio may use photocopy of this Proxy Form for other folios. The Company shall provide additional forms on request.
(2)
Book Post
To ,
If undelivered please return to : Karvy Computershar Private Limite omputershare rivat Kar vy Computershare Private Limite d Unit: Reliance Capital Limited Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500081. Tel : +91-40-23420818 - 25 Fax: +91-40-23420859 Email: rclinvestor@karvy.com website: www.reliancecapital.co.in