Reliance Capital

The Directors have pleasure in presenting the 22nd Annual Report,
 together with the audited statement of accounts of the Company for the
 year ended March 31, 2008.
 
 Financial Results
 
 The performance of the Company for the financial year ended March 31,
 2008 is summarised below:
 
                         Financial Year ended     Financial Year ended
 Particulars                March 31, 2008           March 31, 2007
                  (Rs. in crore) (US$ in million*)(Rs. in crore) (US$ in
                                                               million**)
 
 Gross Income            2079.79       520.34          883.86    202.77
 
 Gross Profit            1188.54       297.36          740.25    169.83
 
 Less: Depreciation        17.09         4.28            7.07      1.62
 
 Profit before Tax       1171.45       293.08          733.18    168.21
 
 Provision for Taxation   146.00        36.53           87.00     19.96
 
 Net Profit              1025.45       256.56          646.18    148.25
 
 Add: Profit brought 
 forward from
 the previous year        873.36       218.50          499.69    114.63
 
 Excess/(Short) 
 provision of 
 Income Tax                (3.41)       (0.85)            -         -
 
 Excess provision 
 of Dividend                 -             -            21.93      5.03
 
 Profit available 
 for Appropriation       1895.41       474.21         1167.80    267.91
 
 Dividend including 
 Dividend Tax             158.04        39.54          100.58     23.07
 
 Transfer to General 
 Reserve                  102.55        25.66           64.62     14.82
 
 Transfer to Statutory 
 Reserve Fund             205.09        51.31          129.24     29.65
 
 Balance carried forward 1429.72       357.70          873.36    200.36
 
 *1 US$ = Rs.39.97
 
 **1 US$ = Rs.43.59
 
 Financial Performance
 
 The Company’s gross income for the financial year ended March 31, 2008
 increased to Rs.2,079.79 crore, from Rs.883.86 crore in the previous
 year, registering a growth of over 135.30 per cent.
 
 The operating profit (PBDIT) of the Company increased 103.95 per cent
 to Rs.1,596.69 crore during the year, up from Rs.782.90 crore in the
 previous year.
 
 Interest expenses for the year increased by 857.40 per cent to
 Rs.408.15 crore, from Rs.42.63 crore, in the previous year.
 Depreciation was at Rs.17.09 crore as against Rs.7.07 crore in the
 previous year. Provision for taxation during the year was Rs.146 crore.
 Net profit for the year increased by over 58.69 per cent to Rs.1,025.45
 crore from Rs.646.18 crore in the previous year.
 
 An amount of Rs.205.09 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.102.55 crore was transferred to the General Reserve
 during the year under review.
 
 The Company’s Net worth as on March 31, 2008, stood at Rs.5,927.50
 crore, as against Rs.5,161.23 crore last year.
 
 Dividend
 
 Your Directors have recommended a dividend of Rs.5.50 (55 per cent) per
 equity share on 24,56,32,800 equity shares of Rs.10 each aggregating to
 Rs.158.04 crore (inclusive of dividend tax) for the financial year
 ended March 31, 2008, which, if approved at the ensuing Annual General
 Meeting, will be paid to (i) all those equity shareholders whose names
 appear in the Register of Members as on June 20, 2008 and (ii) to those
 whose names as beneficial owners, are furnished by the National
 Securities Depository Ltd. and Central Depository Services (India) Ltd.
 for the purpose.
 
 The dividend payout as proposed is in accordance with the Company’s
 policy to pay sustainable dividend linked to long term performance,
 keeping in view the capital needs for the Company’s growth plans and
 the intent to optimal financing of such plans through internal
 accruals.
 
 Management Discussion and Analysis Report
 
 Management Discussion and Analysis Report for the year under review, as
 stipulated under clause 49 of the listing agreement with the Stock
 Exchanges in India, is presented in a separate section forming part of
 the Annual Report.
 
 The Company has entered into various contracts in the areas of
 financial services business. While benefits from such contracts will
 accrue in the future years, their progress is periodically reviewed.
 
 Resources and Liquidity
 
 The Company has raised Rs.9,326 crore during the financial year 2007-08
 by issuance of Commercial Paper, Non- convertible debentures and other
 instruments. The funds were mainly deployed in providing consumer
 finance.
 
 RCL’s debt equity ratio as on March 31, 2008, stands at a
 (conservative) level of 1.5:1. The Company has not accepted any
 deposits from the public.
 
 Subsidiaries
 
 During the year, Reliance Capital Markets Pvt. Ltd. and Reliance Asset
 Management (UK) Plc became subsidiaries of the Company.
 
 In terms of the approval granted by the Central Government under
 section 212(8) of the Companies Act, 1956, copies of the Balance Sheet,
 Profit and Loss Account and Report of the Board of Directors and
 Auditors of the subsisting subsidiaries have not been attached with the
 Balance Sheet of the Company. However, these documents will be made
 available upon request to any member of the Company interested in
 obtaining the same. As directed by the Central Government, the
 financial data of the subsidiaries has been furnished under ‘Details of
 Subsidiaries’, which forms part of the Annual Report.  The annual
 accounts of the Company including that of subsidiaries will be kept for
 inspection by any member. Further, pursuant to Accounting Standard-21
 (AS-21) issued by the Institute of Chartered Accountants of India,
 Consolidated Financial Statements presented by the Company include
 financial information of its subsidiaries.
 
 Fixed Deposits
 
 The Company has neither accepted nor renewed any fixed deposits during
 the year.
 
 Twenty-nine deposit accounts, aggregating to Rs.0.02 crore, remained
 unclaimed on the due dates as on March 31, 2008.
 
 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 Amitabh Jhunjhunwala, Director of the Company, retires by rotation
 and being eligible offers himself for re-appointment at the ensuing
 Annual General Meeting.
 
 A brief resume of the Director retiring by rotation 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, 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, 2008, the applicable accounting standards have been followed
 alongwith proper explanation relating to material departures;
 
 (ii) the Directors have selected such accounting policies and applied
 them consistently and made judgments 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, 2008, and of the profit of the Company
 for the year under review;
 
 (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 accounts for the financial year
 ended March 31, 2008 on a ‘going concern’ basis.
 
 Group
 
 Pursuant to an intimation from the Promoters, the names of the
 Promoters and entities comprising ‘group’ as defined under the
 Monopolies and Restrictive Trade Practices (“MRTP”) Act, 1969 are
 disclosed in the Annual Report for the purpose of the SEBI (Substantial
 Acquisition of Shares and Takeovers) Regulations, 1997.
 
 Consolidated Financial Statements
 
 The Audited Consolidated Financial Statements, based on the Financial
 Statements received from subsidiaries, associates and partnership
 firms, as approved by their respective Board of Directors and Managing
 Committee, have been prepared in accordance with Accounting Standard-21
 (AS-21)on
 
 Consolidated Financial Statements read with Accounting Standard-23
 (AS-23) on the Accounting for Investments in Associates.
 
 Auditors
 
 M/s. Chaturvedi & Shah, Chartered Accountants 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, Chartered
 Accountants and M/s. BSR & Co., Chartered 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.
 
 Particulars 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,
 the names and other particulars of the employees are set out in the
 Annexure to the Directors’ Report.  However, having regard to 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. Any member interested in
 obtaining such particulars may write to the Company Secretary at the
 Registered Office of the Company.
 
 Energy Conservation, Technology Absorption 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.13.23 crore
 
 Transfer of Unclaimed dividend to IEPF
 
 Pursuant to the provisions of section 205(A) of the Companies Act,
 1956, the declared dividend 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.
 
 Corporate Governance
 
 The Company has adopted the “Reliance Anil Dhirubhai Ambani Group -
 Corporate Governance Policies and Code of Conduct” which has set out
 the systems, processes and policies conforming to International
 Standards. 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,
 Chartered Accountants and M/s. 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 of the Company
 during the year.
 
                             For and on behalf of the Board of Directors
 
                                                Anil D. Ambani
                                                   Chairman
 Mumbai
 April 29, 2008