RELIANCE CAPITAL LIMITED
ANNUAL REPORT 2011-2012
My dear fellow Shareowners,
It gives me great pleasure to share with you the highlights of our
Company`s performance during the financial year 2011-12.
Reliance Capital maintained its focus during the year towards improving the
operational performance against the backdrop of slowing GDP growth in the
country and a tough global economic environment.
We continue our endeavour to fulfill the vision of our legendary founder
and my father, late Shri Dhirubhai Ambani. It was Dhirubhai`s ambition to
achieve financial empowerment for millions of ordinary Indians, and, in the
process, enable Reliance Capital to become one of India`s leading financial
Our Company is India`s one of the largest non-banking financial services
company. We have diversified interests in asset management and mutual
funds, life and general insurance, commercial and home finance, stock
broking, investment banking, wealth management services, distribution of
financial products, exchanges, private equity, asset reconstruction,
proprietary investments and other activities in financial services.
Today, each of us can claim with pride and humility that the Reliance Group
touches the life of one in every five Indians, every single day. This proud
association defines our vision and values. It defines who we are, what we
stand for and what we aspire to achieve.
The key financial highlights on a consolidated basis are:
a. Total income of Rs. 6,627 crore (US$ 1 billion), against Rs. 5,536 crore
in the previous year, an increase of 21 per cent
b. Net profit of Rs. 458 crore (US$ 96 million), against Rs. 291 crore in
the previous year, an increase of 57 per cent
c. Earnings per share (EPS) of Rs. 19, against Rs. 12 in the previous year,
an increase of 57 per cent
d. Total Assets of Rs. 35,343 crore (US$ 7 billion), against Rs. 32,087
crore in the previous year, an increase of 10 per cent
e. Total net worth of Rs. 11,697 crore (US$ 2 billion) as against Rs. 7,809
crore in the previous year, an increase of 50 per cent
These robust financial numbers have enabled us to recommend a dividend of
Rs. 7.50 per share against Rs. 6.50 per share in the previous year.
Highest credit ratings
Our Company`s short term borrowing program has been assigned a rating of
"A1+" by ICRA and CRISIL, the highest credit quality rating assigned by the
respective agency to short-term debt instruments. Instruments rated in this
category carry the lowest credit risk in the short term. A third agency,
CARE, assigned our long term debt paper a rating of "CARE AAA". Instruments
with this rating are considered to have the best credit quality, and offer
investors the highest degree of safety for timely servicing of debt
obligations. Such instruments carry lowest credit risk.
Achievements during the year across key operating businesses
The year under review has seen our operating businesses grow from strength
to strength despite uncertain market conditions.
Reliance Capital Asset Management (RCAM) is the largest asset management
company in India, managing over Rs. 1,40,000 crore (US$ 28 billion) across
its mutual funds, pension funds, managed accounts and hedge funds and real
estate fund. RCAM`s profit before tax increased by 5 per cent at Rs. 308
crore (US$ 64 million) as against Rs. 294 crore in the previous year.
Reliance Mutual Fund (RMF) maintained its position amongst the top asset
managers in the Country with a market share of 12 per cent. The average
assets under management (AAUM) for RMF stood at Rs. 78,112 crore (US$ 15
billion). The number of investor folios remained steady at 7 million,
despite recent regulatory changes. RMF has remained focused on newer
opportunities and revised its product mix to tap the retail opportunity,
mainly in debt. During the year, our portfolio of Systematic Investment
Plan and Systematic Transfer plan investor accounts reached to
approximately 2 million. RMF launched a unique retail Gold Savings Fund in
February 2011. This fund is the first gold fund in India and largest in
terms of retail participation and had 28 per cent market share in gold
AAUMs as on March 31, 2012.
During the year, Nippon Life signed final agreements to acquire a 26 per
cent stake in RCAM, subject to regulatory approvals. The transaction pegs
RCAM valuation at Rs. 5,600 crore (US$ 1 billion), translating to 7 per
cent of AAUM. Nippon Life seeks to invest Rs. 1,450 crore (US$ 283 million)
for a 26 per cent stake in RCAM. This is the largest FDI in Indian Mutual
Fund Sector till date and the largest investment in any Indian AMC. Nippon
Life is a 122 year old Global Fortune 100 company, and manages over Rs. 30
lakh crore (over US$ 600 billion) in assets, amongst the largest total
assets in the world for any life insurer.
Reliance Life Insurance (RLI) is amongst the leading private sector life
insurers with a market share of 6 per cent in the private sector. RLI
garnered a total premium of Rs. 5,470 crore (US$ 1 billion) in the year, as
against Rs. 6,548 crore in the previous year. RLI received new business
premium of Rs. 1,809 crore (US$ 377 million) for the year as compared to
Rs. 3,035 crore in the previous year. The renewal premium for the year was
Rs. 3,688 crore (USS 769 million) as against Rs. 3,536 crore in the
previous year - an increase of 4 per cent. The total funds under management
increased by 5 per cent to Rs. 18,767 crore (USS 4 billion). During the
year, RLI sold the highest number of individual premium policies in the
private sector at approximately 11 lakh. Nippon Life invested a sum of Rs.
3,062 crore (USS 58.6 million) into the business during the year.
Our broking business consists of Reliance Securities, one of the leading
retail broking houses in India, that provides customers with access to
equities, equity options and commodities futures, wealth management,
portfolio management services, mutual funds, IPOs and investment banking,
and Quant Capital, which caters to wholesale client segment of the capital
markets, including foreign and domestic institutions, corporations and
ultra high net worth individuals. We had approximately 7 lakh broking
accounts as on March 31, 2012. The average daily equity broking turnover
stood at Rs. 1 282 crore (USS 267 million). In wealth management, the AUM
stood at Rs. 578 crore as on March 31, 2012, an annual growth of 152 per
cent. In investment banking, the company handled 2 issues and mobilised Rs.
79 crore (USS 16 million) and did IPO funding of Rs. 135 crore (USS 26
million). The broking business achieved a profit before tax of Rs. 32 crore
(USS 7 million) for the year ended March 31, 2012, an increase of 54 per
cent from the previous year.
The distribution business of Reliance Capital, under the brand name
Reliance Money, is a comprehensive financial services and solutions
provider, providing customers with access to mutual funds, life and general
insurance products, money transfer, currency exchange, loans, gold coins
and premium products. It has a pan-India distribution network of over 6,000
outlets. Reliance Money sold more than 2,200 kilograms of Gold in the
financial year 2011-12, an increase of 54 per cent over the previous year.
Reliance Money has maintained its position as the largest private sector
partner for Western Union Money Transfer, and has handled over 22 lakh
money transfer transactions during the year. The business achieved profit
before tax of Rs. 23 crore (USS 5 million) for the year ended March 31,
2012 as against a profit of Rs. 12 crore in the previous year.
Reliance General Insurance is amongst the leading private sector general
insurance companies in India with a market share of 8 per cent. Reliance
General Insurance`s gross written premium for the year ended March 31, 2012
was Rs. 1,713 crore (USS 357 million) as against Rs. 1,655 crore in the
Commercial Finance Business offers a wide range of products which include
home loans, loans against property, SME loans, commercial vehicle loans,
loans for construction equipment and infrastructure loans. In accordance
with our focus on improving the asset quality as well as the profitability
of each loan given, and not merely a gain in market share, nearly 100 per
cent of the outstanding book was secured as on March
31, 2012 as against 97 per cent as on March 31, 2011.
Reliance Commercial Finance is one of the leading lenders in the Indian non
banking finance space with disbursements at Rs. 7,937 crore (USS 2 billion)
for the year ended March 31, 2012. The outstanding loan book grew by 8 per
cent to Rs. 13,239 crore (USS 3 billion) as on March 31, 2012, compared to
Rs. 1 2,290 crore as on March 31, 2011. This loan book is spread over
94,000 customers from top 18 Indian metros. The profit before tax was at
Rs. 254 crore (USS 53 million) as against Rs. 269 crore for the previous
We have drawn up exciting growth plans for the next three to five years:
* Increase our customer base - from 20 million to 50 million
* Increase the distribution reach - from 5 thousand to 25 thousand cities
* Increase the number of business partners - from half a million to one
* Globalise operations by leveraging our domestic experience and
capabilities to expand our asset management and wealth management
businesses in emerging markets across the world
Together, these initiatives will further accelerate our growth and lead to
substantial value creation for all.
The Company continued to contribute actively to community welfare
activities and took up several initiatives and measures related to
education and healthcare.
Reliance Capital has always maintained the best governance standards and
practices by adopting, as is the norm for all constituent companies of the
Group, the "Reliance Group -Corporate Governance Policies and Code of
Conduct". These Policies and Code prescribe a set of systems, processes and
principles, which conform to the highest international standards and are
reviewed periodically to ensure their continuing relevance, effectiveness
and responsiveness to the needs of investors, both local and global, and
all other stakeholders.
Our founder, the legendary Shri Dhirubhai Ambani, gave us a simple mantra
to aspire to the highest global standards of quality, efficiency,
operational performance and customer care. We remain committed to upholding
that vision. Dhirubhai exhorted us to think big. With your continued
support, we will think bigger. Indeed not just bigger but better, creating
ever greater value for all our stakeholders.
Anil Dhirubhai Ambani