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2.7 (0.8%)
3.3 (0.98%) | Notes to Accounts | Year End : Mar '11 |
A. Background
Reliance Capital Limited. (''the Company'') is registered as a
Non-Banking Financial Company (''NBFC'') as defined under Section 45-IA of
the Reserve Bank of India Act, 1934. The Company is principally engaged
in lending and investment activities.
1. a) Previous Year''s figures have been reworked, regrouped and
reclassified wherever necessary.
b) The figures for the current year includes figures of Reliance
Commercial Finance Pvt. Ltd. (Formerly Reliance Consumer Finance Pvt.
Ltd.) (RCFPL) which is amalgamated with the Company with effect from
April 1, 2010 and therefore to that extent not comparable to the
Previous Year''s figures.
2. a) Pursuant to the Scheme of Amalgamation (the Scheme) under
Sections 391 to 394 of the Companies Act, 1956 as sanctioned by the
Hon''ble High Court of judicature at Bombay vide Order dated April 29,
2011 and fled with the Registrar of Companies (RoC) Maharashtra on May
18, 2011, Reliance Commercial Finance Pvt. Ltd. (RCFPL) - (wholly
owned subsidiary of the Company whose core business was commercial
finance business) has been amalgamated with the Company with effect from
April 1, 2010 i.e., the Appointed Date.
b) The Amalgamation has been accounted for under the Purchase Method
as prescribed by Accounting Standard (AS) 14 Accounting for
Amalgamation prescribed by Companies (Accounting Standards) Rules,
2006.
c) In accordance with the said Scheme : i) All the assets, debts,
liabilities, duties and obligations of RCFPL have been vested in the
Company with effect from
April 1, 2010 and have been recorded at their respective book values
under the purchase method of accounting for Amalgamation. All
Intercompany balances and transactions during the year has been
cancelled. There were no difference in the accounting policies of RCFPL
and the Company.
ii) In accordance with the said Scheme, any excess / (shortfall)
arising on transfer of assets over liabilities have been credited /
(debited) to the General Reserve.
iv) As per Scheme of Amalgamation, investments in the shares of RCFPL
of Rs. 329 crore is written off in the profit & Loss Account and an
equivalent amount is withdrawn from the General Reserve. Had the scheme
not provided for the treatment the difference of Rs. 0.01 crore would
have been credited to Capital Reserve and General Reserve would have
been lower by Rs. 0.01 crore.
b) The Company invests in Pass Through certificates (PTCs) and purchases
loans through the direct assignment route. In some of the
securitisation transactions, the Company also has invested in the
assets securitised by it, which, however, is restricted to the maximum
limit prescribed by RBI from time to time.
c) During the year, Company has entered into an agreement with Reliance
Home Finance Pvt. Ltd., a subsidiary of the Company (Previous Year with
AU Financiers (India) Pvt. Ltd.) for loan assignment. As per deed of
assignment, for loans aggregating to Rs. 492.88 crore (Previous Year Rs.
8.16 crore), the Company has been assigned the right for future
receivables along with a power of attorney authorising the Company,
inter-alia, to obtain possession of the assets in case of default. The
above loans are secured against hypothecation of underlying assets.
3. The Company had entered into business transfer agreements (BTA) on
April 26, 2010 with its subsidiaries i.e. Reliance Home Finance Pvt.
Ltd. (RHFPL) and Reliance Commercial Finance Pvt. Ltd. (RCFPL) to
transfer the business of Commercial Finance Division (RCF) at book
value, such that the entire economic risk and reward of the RCF segment
passes to the purchasers from the commencement of business on the value
date i.e. April 1, 2010.
4. Owing to the amalgamation of Reliance Commercial Finance Pvt. Ltd.
(Formerly Reliance Consumer Finance Pvt. Ltd.) wholly owned subsidiary,
with the Company with effect from April 1, 2010, the business transfer
agreements (BTA) entered on April 26. 2010 stand cancelled.
The Company has amended the BTA with Reliance Home Finance Pvt. Ltd. on
January 31, 2011. As per the amended BTA with RHFPL :
a) The Company holds loan assets of Rs. 134.88 crore and liabilities of Rs.
1.14 crore of RHFPL in the capacity of trustee as on March 31, 2011.
b) During the year, the Company has transferred the following assets,
income and expenses : i) unamortized DSA Commission of Rs. 1.91 crore ii)
interest & other income of Rs. 46.68 crore iii) interest & other expenses
of Rs. 31.25 crore iv) DSA commission expenses of Rs. 1.87 crore
5. The Company operates two Employee Stock Option Plans; ESOS Plan A
and ESOS Plan B introduced in the financial year 2009- 10, which cover
eligible employees of the Holding Company, the Company and its
subsidiaries. The vesting of the options is from expiry of one year and
ranges till four to five years as per Plan under the respective ESOS(s).
Each Option entitles the holder thereof to apply for and be allotted /
transferred one Equity Share of the Company of Rs. 10 each upon payment
of the exercise price during the exercise period. The Company
implements and manages the ESOS plan through a trust. Advance of Rs.
130.41 crore (Previous Year Rs. 96.41crore) has been granted to Trust.
Out of the said advance, Trust has purchased 16,00,000 (Previous Year
11,00,000) Equity Shares on account of ESOS upto March 31, 2011.
The Company has chosen to account for the Plan by the Intrinsic Value
Method. The total expense recognised for the period arising from stock
option plan as per Intrinsic Value Method is Rs. Nil (Previous Year Rs.
Nil). Had the company adopted fair value method the net results for the
year would have been lower by Rs. 14.20 crore (Previous Year Rs. 2.53
crore) [net of tax saving Rs. 14.20 crore (Previous Year Rs. 2.11 crore)
and accordingly EPS (both Basic and Diluted) would have been lower by Rs.
0.57 (Previous Year Rs. 0.09).
6. Micro, small and medium enterprises :
During the current year, the management has carried out the process of
identification of enterprises, which have provided goods and services to
the Company and which qualify under the definition of medium and small
enterprises, as defined under Micro, Small and Medium Enterprises
Development Act, 2006. Based on the inputs received on above, there
have been no reporting cases of delays in payments to micro and small
enterprises or of interest payments due to delays in such payments.
7. The Company is a partner in the following firms: i) Reliance Capital
Partners:
a) The firm consists of following partners:
i) Reliance Capital Limited ii) Reliance Land Pvt. Ltd.
b) profit sharing ratio:
The profit is distributed between the partners on the basis of the
weighted average capital.
c) The profit of Rs. 39.58 crore is considered as profit of the current
financial year (Previous Year Loss of Rs. 1.04 crore). ii) Reliance
Capital Infrastructure Partners:
a) The firm consists of following partners:
i) Reliance Capital Limited ii) Reliance Infocomm Infrastructure Pvt.
Ltd. iii) Reliance Infraprojects Ltd.
b) profit sharing ratio:
The profit is distributed between the partners on the basis of the
weighted average capital.
c) The firm has not commenced operations as at March 31, 2011 and there
has been no contribution of capital upto March 31, 2011.
8. Tax on Proposed Dividend
As on April 27, 2011, the Reliance Capital Assets Management Ltd.
(RCAM), a subsidiary of the Company has proposed dividend of Rs. 161.40
crore (Dividend distribution tax thereon Rs. 26.18 crore) which is
subsequently approved by its shareholders in their general meeting held
on May 23, 2011. As on May 26, 2011 the Company has received dividend
of Rs. 149.99 crore from RCAM. In view of Section 115- O of the Income
Tax Act, 1961, the Company has reduced its dividend tax liabilities to
that extent.
9. Segment reporting:
As per paragraph 4 of Accounting Standard -17 (AS-17), on Segment
Reporting notified by the Companies (Accounting Standard) Rules 2006,
where a single financial report contains both consolidated financial
statements and the separate financial statements of the holding company,
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. 17 of the abridged consolidated financial
statements.
10. Related party disclosures: (A) List of Related Parties: i) Holding
Company
Reliance Innoventures Pvt. Ltd. ii) Individual Promoter
Shri Anil D. Ambani, the person having control during the year
11. a) Accrued Premium / Interest on Investments includes Rs. 61.08
crore due from Associates (Previous Year Rs. 24.95 crore).
b) Accrued Premium / Interest on Investments amounting to Rs. 126.36
crore are due within 1 Year. (Previous Year Rs. 45.31 crore).
12. In the financial year 2008-09, the Company has entered into a joint
venture with KGS Developers Ltd. in respect of real estate project
development. The Company has invested Rs. 85 crore and is entitled to
share the profit / Loss equally.
13. Contingent Liabilities and Commitments (As certified by the
Management)
(Rs. in crore)
Particulars March 31, 2011 March 31, 2010
Contingent Liabilities
i) Guarantees to Banks and Financial
Institutions on behalf of
subsidiaries and 1,142.48 235.00
Associates
ii) Claims against the Company not
acknowledged as debt 12.71 11.95
Commitments
iii) Estimated amount of contracts
remaining to be executed on capital
account 70.58 27.11
(net of advances)
iv) Uncalled amount of Investments 354.68 371.66 |
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| Source : Dion Global Solutions Limited | |
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