My Dear fellow Shareowners,
It gives me great pleasure to share with you the highlights of our
Company''s performance during the financial year 2010-11.
Today we stand closer to fulfilling the vision of our legendary founder
and my father, late Shri Dhirubhai Ambani, in taking Reliance Capital
to a position of pre-eminence as the leading financial powerhouse of a
young, competitive and globalising India.
Our current base of 20 million strong and loyal customers puts us in
the ranks of the largest financial services players in India. This
large and rapidly growing family is served by over 6,800 distribution
outlets and half-a-million business partners.
25 Years old but a ''Young'' achiever
This year, our Company completed 25 years of existence, although we
started our commercial operations seriously only six years ago in late
2005. This makes us one of the youngest players in India''s financial
However, our relative youth compared to peers does not deter us from
pursuing our core values or DNA of thinking big and setting ourselves
industry-beating milestones in the fastest possible time.
It is this strong faith and self-belief that has powered our emergence
in a short span of time as a leading Indian player in nearly all our
businesses, surpassing established names operating for decades.
For us, growth is not an end in itself. It is but a means to the
creation of wealth and value for our investors. We remain committed to
being one of the most profitable financial services companies in India.
In line with this vision, we looked, during the year, to lower our cost
structures and dramatically raise operational efficiencies across all
our businesses. As a result, we maintained our profitability despite
important changes in the regulatory regime that severely impacted
growth and gave rise to avoidable uncertainties in key service
I am very happy to inform you that our hard work and clarity of focus
during the year paid off handsomely. Some of our key businesses viz.,
asset management, commercial finance and broking & distribution, grew
their bottomline substantially – well over 40 per cent year on year -
while others managed to considerably pare down their losses. Our life
insurance business, for instance, reduced its losses by as much as 54
In fact, it achieved a small profit ofRs. 34 crore in the second half of
the year. We are on course to achieve significant profits in the life
insurance domain in the current financial year.
Reliance Mutual Fund retains its ranking as the largest mutual fund in
India for the fourth year in a row. Reliance Life Insurance counts
amongst the top four private sector life insurers in India in terms of
individual new business premium. Reliance Commercial Finance is amongst
the leading lenders in the non-banking financial space. Reliance General
Insurance is amongst the leading private sector general insurance
companies in India.
Our Company is one of India''s leading private sector financial services
companies and ranks among the top four private sector financial services
and banking groups, in terms of net worth. It has interests in asset
management and mutual funds; life and general insurance; commercial
finance; stock broking; investment banking; wealth management services;
distribution of financial products; exchanges; private equity; asset
reconstruction; proprietary investments and other activities in
Our Company is an integral part of the Reliance Group. Reliance Group
is amongst India''s leading business houses with 10 million strong
shareholders base and over 230 million customers. It has a strong
presence across a wide array of high growth commercial- facing
businesses of telecom, financial services, energy power, infrastructure
and media and entertainment.
Today, each of us can claim with pride and humility that the Reliance
Group touches the life of one in every eight 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:
- Total income ofRs. 5,498 crore (US$ 1.2 billion), against Rs. 6,141
crore (US$ 1.3 billion) in the previous year
- Net profit (before one-time provisioning) ofRs. 475 crore
(US$ 104.2 million), against Rs. 435 crore (US$ 95.3 million) in the
previous year, an increase of 9 per cent
- Earnings per share (EPS) of Rs. 11.85 (US$ 0.3), against Rs.17.69 (US$
0.4) in the previous year
- Total Assets of Rs. 31,965 crore (US$ 7.2 billion), against Rs. 26,029
crore (US$ 5.8 billion) in the previous year, an increase of 23 per
- Total net worth of Rs. 7,862 crore (US$ 1.8 billion) as against Rs.
7,712 crore (US$ 1.7 billion) in the previous year, an increase of 1
These robust financial numbers have enabled us to recommend a dividend
ofRs. 6.5 per share.
Highest credit ratings
Our Company''s short term borrowing program has been assigned a rating
of A1 by ICRA, the highest credit rating given by the agency.
Another credit rating agency Fitch, assigned our borrowing program a
rating of F1 , which stands for the highest credit quality and
indicates the strongest capacity for timely repayment of financial
commitment - a resounding reaffirmation of our unwavering and
long-standing commitment to financial prudence and conservatism.
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
minimal 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 continual changes in the regulatory
environment which led to operating uncertainties in some of the
financial services sector.
Reliance Capital Asset Management (RCAM) managed nearly Rs. 1,50,000
crore (US$ 33.4 billion) across its mutual funds, pension funds,
managed accounts and hedge funds. RCAM''s profit before tax increased by
10 per cent at Rs. 294 crore (US$ 64.6 million) as againstRs. 268 crore
(US$ 58.8 million) in the corresponding previous period.
Reliance Mutual Fund (RMF) maintained its leadership position with a
market share of 14.5 per cent. The average assets under management
(AAUM) for RMF stands at Rs. 1,01,576 crore (US $ 22.3 billion). The
number of investor folios have remained steady at 7.3 million, despite
recent regulatory changes.
In conjunction with hardening liquidity conditions, these changes have
adversely impacted the pace of growth in AAUMs for India''s mutual fund
Industry. RMF has addressed this by focusing on newer opportunities.
RMF shifted its product mix to tap the retail opportunity. During the
year, our portfolio of Systematic Investment Plan and Systematic
Transfer plan investor accounts increased by 71 per cent to 1.87
RMF launched a unique retail Gold Savings Fund in February 2011. It is
the largest gold fund in India in terms of retail participation. More
than 2 lakh investors participated in this fund offer through
systematic investment plans (SIPs) and RMF has received a commitment of
approximately Rs. 3,000 crore (US$ 658.1 million) over 10 years through
Reliance Life Insurance (RLI) is amongst the leading private sector
life insurers with a market share of 7.7 per cent in the private
sector. It ranks among the top four private sector companies in terms
of new individual business premium with a market share of 8.7 per cent.
RLI garnered a total premium of Rs. 6,548 crore (US$ 1.4 billion) in the
year, as against Rs. 6,588 crore (US$ 1.4 billion) in the previous year.
RLI received new business premium of Rs. 3,035 crore (US$ 665.9 million)
for the year as compared to Rs. 3,921 crore (US$ 860.3 million) in the
previous year. The renewal premium for the year was Rs. 3,536 crore (US$
776.0 million) as against Rs. 2,684 crore (US$ 588.9 million) in the
previous year – an increase of 32 per cent. The total funds under
management increased by 31 per cent to Rs. 17,855 crore (US$ 4.0
billion). During the year, RLI sold the highest number of individual
premium policies in the private sector at 1.9 million. The Company
invested a sum of Rs. 120 crore (US$ 26.9 million) into the business by
way of capital infusion during the year as against Rs. 231 crore (US$
51.7 million) in the previous year, a 48 per cent reduction. RLI did
not require any fresh capital for the last 2 quarters of the financial
In fourth quarter of financial year 2010-11, Nippon Life, Japan''s
largest private life insurer, signed a definitive agreement to acquire a
26 per cent stake in Reliance Life Insurance, subject to necessary
regulatory approvals. This is the largest FDI in Indian Financial
Services sector and by far, the largest FDI in Insurance sector. The
transaction pegs the valuation of Reliance Life Insurance at Rs. 11,500
crore (US$ 2.6 billion). Nippon Life Insurance will invest Rs. 3,062
crore (US$ 680.0 million) to acquire 26 per cent in Reliance Life
Insurance. A 121 year old life insurance company, Nippon Life is the
6th largest private life insurer in the world. As a strategic partner,
Nippon Life will bring vast experience, expertise and global best
practices in areas of product development, underwriting, investment
management, distribution, customer relationship management and risk
Reliance Securities, the equity broking arm of Reliance Capital, is one
of the leading retail broking houses in India, providing customers with
access to equities, equity options, wealth management services, mutual
funds, IPOs and investment banking. Reliance Securities had 6.64 lakh
broking accounts as on March 31, 2011. The average daily equity broking
turnover stood at Rs. 1,413 crore (US$ 310.0 million). In wealth
management, the AUM stood at Rs. 169 crore as on March 31, 2011, an
annual growth of 85 per cent. In investment banking, the company
handled 4 issues and mobilized Rs. 620 crore (US$ 136.0 million) and did
IPO funding of Rs. 3,164 crore (US$ 694.2 million). Reliance Securities
achieved profit before tax of Rs. 22 crore (US$ 4.8 million) for the year
ended March 31, 2011, as against Rs. 28 crore (US$ 6.0 million) in the
The distribution business of Reliance Capital, known as 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 6,200
outlets. Reliance Money sold nearly 1,500 kg. of Gold in the financial
year 2010-11, an increase of 235 per cent over the previous year figure
of 433 kg. Reliance Money is now the largest private sector partner for
Western Union Money Transfer, and has handled over 20 lakh money
transfer transactions during the year. The business achieved profit
before tax of Rs. 12 crore (US$ 2.7 million) for the year ended March 31,
2011 as against a loss of Rs. 13 crore (US$ 2.8 million) in the previous
Reliance General Insurance is amongst the leading private sector
general insurance companies in India with a market share of 9.4 per
cent. Reliance General Insurance''s gross written premium for the year
ended March 31, 2011 was Rs. 1,655 crore (US$ 363.1 million) as against Rs.
1,980 crore (US$ 434.3 million) in the corresponding previous period.
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
financing. The focus in this business is primarily on improving the
asset quality as well as the profitability of each loan given; and not
merely a gain in market share. Reliance Commercial Finance has emerged
as one of the leading lenders in the Indian non banking finance space
with a 52 per cent increase in disbursements at Rs. 8,782 crore (US$ 1.9
billion). The Company has been disbursing only secured loans and is
winding down the unsecured loans portfolio. The outstanding loan book
grew by 34 per cent to Rs. 12,290 crore (US$ 2.8 billion) as on March 31,
2011, compared to Rs. 9,166 crore (US$ 2.1 billion) as on March 31, 2010.
This loan book is spread over 1,09,800 customers from top 18 Indian
metros. The profit before tax grew 99 per cent at Rs. 269 crore (US$ 59.1
million) as against Rs. 135 crore (US$ 29.6 million) 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 and towns
- Increase the number of business partners - from half a million to
- Globalize 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.
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.
The Company continued to contribute actively to community welfare
activities and took up several initiatives and measures related to
education and healthcare.
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