Reliance Capital

My dear fellow Shareowners,
 
 It gives me great pleasure to share with you the highlights of our
 Companys performance during the year 2008-09.
 
 For India and for the world, 2008-09 was one of the toughest years to
 be in business, especially in the financial services Industry.
 
 For Reliance Capital, it was another outstanding year - a year in which
 we made huge strides, and moved closer to our goal of
 
 being one of the top players in most of the businesses in which we
 operate.
 
 What gives us the greatest satisfaction, however, is the fact that we
 are today closer to fulfilling the vision of our legendary founder and
 my father, late Shri Dhirubhai Ambani.
 
 It was one of Dhirubhais great dreams to bring the fruits of financial
 empowerment to millions of ordinary Indians, and, in the process,
 enable Reliance Capital to become one of Indias leading financial
 services players. Today, we are well on our way to translating his
 dreams into reality. Reliance Capital is now Indias fastest-growing
 financial services powerhouse, serving over 15 million customers.
 
 Our customer base, amongst the largest in India in financial services,
 is spread across five thousand towns and cities. It is served by twelve
 thousand distribution outlets and over half a million business
 partners.
 
 Reliance Mutual Fund remains the largest mutual fund for the second
 year in a row. We continue to remain amongst the fastest growing
 private sector players in the insurance industry. We are among the top
 three general insurers and top four life insurers in the private
 sector. Our Company has a market capitalization in excess of Rs.20,000
 crore and 1.3 million shareholders.
 
 Our Company now ranks among the top three private sector banking and
 finance companies on all major parameters. It has interests in asset
 management and mutual funds, life and general insurance, private equity
 and proprietary investments, stock broking and depository services,
 consumer finance, financial products distribution, asset reconstruction
 and institutional equities.
 
 Our Company is an integral part of the Reliance Anil Dhirubhai Ambani
 Group, Indias third largest business house. Our goal is not just to
 build a great enterprise for our stakeholders but a great future for
 India - the new India of the new millennium, a young country that
 desires real and rapid change and seeks a quality of life that is
 second to none.
 
 Today the Reliance Anil Dhirubhai Ambani Group touches the life of one
 in eight Indians, every single day.
 
 Across different companies, our group enjoys the support of a customer
 base of over 150 million and a shareholder base of over 11 million -
 the largest for any business group in India.
 
 This proud association shapes our vision and values. It defines who we
 are, what we stand for and what we aspire to achieve.
 
 We are not just about scale and size; we are also about the pursuit of
 excellence, the integrity of our values and the quality of our
 services.
 
 Performance 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:
 
 Consolidated total income of Rs.6,019 crore (US$ 1.3 billion), against
 Rs.4,919 crore in the corresponding previous period, an increase of 22
 per cent.
 
 Consolidated net profit of Rs.1,016 crore (US$ 221 million), against
 Rs.1,009 crore in the corresponding previous period, an increase of 1
 per cent.
 
 Consolidated Earnings per share (EPS) of Rs.41.35 (US$ 0.90), against
 Rs.41.08 in the corresponding previous period, an increase of 1 per
 cent.
 
 Total Assets of the company stood at Rs.24,260 crore (US$ 4.8 billion),
 an increase of 142 per cent over the previous year.
 
 Total net worth was Rs.7,340 crore (US$ 1.5 billion), an increase of 13
 per cent over the previous year.  Highest credit ratings - from all
 raters
 
 Your Companys short term debt programme has been assigned a rating of
 A1+ by ICRA Ltd., the highest credit quality rating assigned by the
 agency to short-term debt instruments. Instruments rated in this
 category carry the lowest credit risk in the short term. CARE Ltd.
 assigned the long term debt programme a rating of CARE AAA.
 Instruments with this rating are considered to be of the best credit
 quality, offering highest safety for timely servicing of debt
 obligations. Such instruments carry minimal credit risk.
 
 These robust financial numbers have enabled us to recommend an
 increase, subject to confirmation at the AGM, in the dividend to
 Rs.6.50 a share against Rs.5.50 a share in the previous year.
 
 Achievements during the year
 
 The year under review saw our Company post significant achievements
 despite the most challenging market conditions in the last two decades.
 
 The average assets under management (AAUM) of the Indian mutual fund
 industry declined by 7 per cent, from Rs.5,00,973 crore in March 2008
 to Rs.4,93,287 crore in March 2009. In line with this, during the same
 period, the AAUM for Reliance
 
 Mutual Fund (RMF) also fell from Rs.90,938 crore to Rs. 80,963 crore.
 However, RMF continued to be Indias No.1 Mutual
 
 Fund with a market share of 16.4 per cent.
 
 Reliance Capital Asset Management (RCAM) was appointed as one of the
 fund managers by the Employees Provident Fund Organization (EPFO). A
 hugely prestigious account, EPFO has entrusted Rs.27,575 crore to RCAM,
 for investment management.
 
 RCAM was also appointed as one of the six asset managers by the Pension
 Fund Regulatory and Development Authority (PFRDA) to manage money under
 the new pension scheme (NPS).  RCAM is the only private sector asset
 management company, which has been selected to manage funds for both
 the EPFO and the new pension scheme.
 
 During the year, the Indian life insurance industry recorded new
 business premium of Rs.87,108 crore as against Rs.92,989 crore in the
 previous year, a decrease of 6.75 per cent. Against this, Reliance Life
 Insurance garnered new business premium of Rs.3,514 crore for the year
 as compared to Rs.2,751 crore in the previous year, an increase of 28
 per cent.  Reliance Life Insurance has maintained its position amongst
 the top four (in terms of monthly new business premium) private sector
 life insurance companies in India.
 
 Reliance Consumer Finance offers a wide range of products, which
 include personal loans, vehicle loans (car and commercial), home loans,
 loan against property, and SME loans. The focus in this business is
 primarily the asset quality and the profitability of each loan given;
 not merely growth or market share gains. In the September to December
 quarter of the year, there was a steep drop in liquidity due to the
 global financial meltdown that had its fallout on India. Consequently
 we slowed our disbursals. This naturally resulted in a smaller loan
 book, which fell from Rs.9,513 crore last year to Rs.8,576 crore this
 year.
 
 Reliance Money, one of the leading brokerage and distributor of
 financial products in India with more than three million customers.
 Reliance Money gives its customers comprehensive financial services and
 solutions by providing access to equities, equity options, and
 commodities futures, mutual funds, IPOs, life and general insurance
 products, offshore investments and credit cards. Reliance Money
 generated revenues of Rs.352 crore for the year ended March 31, 2009,
 as against Rs.239 crore - an increase of 47 per cent.
 
 Reliance General Insurance has maintained its position amongst the top
 three (in terms of monthly gross written premium) private sector
 General insurance companies in India. Gross Direct Premium for the year
 ended March 31, 2009 was virtually unchanged at Rs.1,915 crore as
 against Rs.1,946 crore in the corresponding previous period. The pace
 of growth in this business was moderated in response to the general
 economic slowdown and because the management felt that we owed it to
 our shareholders to focus on improving profitability rather than merely
 increasing the revenues.
 
 During the year, our Institutional broking arm, Reliance Equities
 International and our asset reconstruction business, Reliance Asset
 Reconstruction commenced business operations. Also, Reliance Capital
 Services, an initiative to cross-sell the Reliance Capital products to
 the all other customers of Reliance ADA group commenced operations.
 
 Future Plans
 
 We have drawn up exciting growth plans for the next three to five years
 
 Increase our customer base - from fifteen million to fifty million.
 
 Increase the distribution reach - from five thousand to twenty thousand
 cities and towns.
 
 Increase number of business partners - from half a million to one
 million.
 
 Enter the banking sector as and when regulations permit.
 
 Globalize operations by leveraging our domestic experience and
 capabilities to expand our asset management, life insurance and broking
 operations in emerging markets across Asia, Africa, and the Middle East
 
 Together, these initiatives will further accelerate our growth and lead
 to substantial value creation for each of us.
 
 Corporate Governance
 
 We have adopted The Corporate Governance Policies and Code of Conduct
 of the Reliance Anil Dhirubhai Ambani Group., as is the norm for all
 constituent group companies. Benchmarked to the best global standards,
 these model practices aim to promote and protect the interests of all
 stakeholders and set out the systems, processes and principles which we
 scrupulously adhere to at all times.
 
 Social Commitments
 
 In the past year, we have undertaken several important initiatives and
 measures in the area of education and healthcare, signifying our
 continued and long-standing commitment to social and community welfare.
 
 Our Commitment
 
 Our founder, the legendary Dhirubhai H. 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.
 
 It is this inspiration from our founder that drives us to always strive
 for bigger and better, achieving ever greater value for all our
 stakeholders.
 
 
 Anil D. Ambani
 Chairman