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LETTER TO SHAREOWNERS:
My Dear fellow Shareowners,
It gives me great pleasure to share with you the highlights of our Company's performance during 2012–13.
Reliance Capital made good progress during the year towards improving operational performance and unlocking value in its businesses, despite a challenging macro–economic environment.
We continue to move forward in fulfilling the vision of our legendary founder and my father, late Shri Dhirubhai Ambani, to attain financial empowerment for millions of ordinary Indians, and, in the process, enable Reliance Capital to become one of India's leading financial services players.
Today, our Company is one of India's largest non–banking financial services company. We have diversified interests in asset management, mutual funds, pension funds, life and general insurance, commercial finance, home finance, stock broking and depository services, wealth, management, private equity, venture capital, financial products distribution, asset reconstruction and other activities in financial services.
Our Company is an integral part of the Reliance Group. Reliance Group is amongst India's leading business houses with a 10 million strong shareholders base and over 230 million customers. We have a strong presence across the wide array of high growth consumer 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 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:
1. Total income of Rs. 7,519 crore (USS 1.4 billion), against Rs. 6,627 crore in the previous year, an increase of 13 per cent
2. Net profit of Rs. 812 crore (USS 149 million), against Rs. 458 crore in the previous year, an increase of 77 per cent
3. Earnings per share (EPS) of Rs. 33.1 (USS 0.6), against Rs. 18.6 in the previous year
4. Total Assets of Rs. 40,588 crore (USS 7.5 billion), against Rs. 35,345 crore in the previous year, an increase of 15 per cent
5. Total net worth of Rs. 11,991 crore (USS 2.2 billion) as against Rs. 1 1,696 crore in the previous year, an increase of 3 per cent
6. Special Interim Dividend of Rs. 5 (50 per cent) per Equity Share each of Rs. 10, aggregating to Rs. 144 crore was declared.
These robust financial numbers have enabled us to recommend a final dividend of Rs. 8.00 per share against Rs. 7.50 per share in the previous year
Highest credit ratings
Our Company's short term debt programme has been assigned a rating of "A1+" by ICRA and CRISIL Limited, 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
During the year under review, all our operating businesses achieved profitable growth.
Reliance Capital Asset Management (RCAM) managed over Rs. 1,73,000 crore (USS 31.8 billion) across its mutual funds, pension funds, managed accounts and hedge funds. RCAM's income from operations rose by 11 per cent to Rs. 735 crore (USS 135 million), and profit before tax was at Rs. 290 crore (USS 53 million) as against Rs. 308 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 rose by 21 per cent to Rs. 94,580 crore (USS 17.4 billion). With a recovery in equity markets and favourable regulatory changes in the second half of the financial year, the industry was able to reverse part of the decline from the previous years. RMF continued to focus on the under–penetrated retail debt market and increased the share of retail debt to 40 per cent of the overall debt AUMs as on March 31, 2013 as compared to 23 per cent as on March 31, 2012. RMF's gold fund continued to grow and crossed Rs. 29.3 billion (USS 538 million) in AAUMs for the quarter ended March 31, 2013. RMF had 24 per cent market share in gold AAUMs as on March 31, 2013.
During the year, Nippon Life acquired a 26 per cent stake in RCAM. The transaction valued RCAM at Rs. 56 billion (USS 1 billion). Nippon Life invested Rs. 14.5 billion (USS 267 million) for this stake, the largest FDI in the Indian Mutual Fund Sector till date and the largest investment in any Indian AMC. Nippon Life is an over 120 year old Global Fortune 100 company and manages approx. USS 800 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 5 per cent in the private sector. RLI garnered a total premium of Rs. 4,015 crore (USS 738 million) in the year. RLI received new business premium of Rs. 1,377 crore (USS 253 million) for the year, while renewal premium for the year was Rs. 2,669 crore (USS 491 million). The total funds under management stood at Rs. 18,189 crore (USS 3.3 billion).
Reliance General Insurance (RGI) is amongst the leading private sector general insurance companies in India with a market share of over 7 per cent. RGI's gross written premium for the year ended March 31, 2013 increased by 16 per cent to Rs. 2,036 crore (USS 374 million) as against Rs. 1,748 crore in the previous year.
Our broking business consists of Reliance Securities, one of the leading retail broking houses in India, and provides customers with access to equities, options and futures products, wealth management, portfolio management services and mutual funds. We had over 7.50 lakh broking accounts as on March 31, 2013. The average daily equity broking turnover rose by 14 per cent to Rs. 1,426 crore (USS 262 million).
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 over 6,200 outlets. Reliance Money sold nearly 5,000 kilograms of Gold in the financial year 2012–13, an increase of 123 per cent over the previous year. Reliance Money has maintained its position as one of the largest private sector partners for Western Union Money Transfer, and has handled nearly 25 lakh money transfer transactions during the year.
Commercial FinanceBusiness offers a wide range of products which include home loans, loans against property, SME loans, vehicle loans, loans for construction equipment, and Infrastructure financing. The focus of this business continues to be asset–backed lending for productive asset creation. In accordance with our focus on improving the asset quality as well as the profitability, 100 per cent of the outstanding book was secured as on March 31, 2013. Reliance Commercial Finance is one of the leading lenders in the Indian non banking finance space with disbursements at Rs. 8,745 crore (USS 1.6 billion), an increase of 10 per cent over the corresponding previous period. The outstanding loan book grew by 3 per cent to Rs. 13,652 crore (USS 2.5 billion) as on March 31, 2013. This loan book is spread across 74,000 customers from top 20 Indian metros. The total income increased by 8 per cent to Rs. 2,097 crore (USS 386 million), while profit before tax rose to Rs. 342 crore (USS 63 million) as against Rs. 254 crore in the previous year.
We have submitted an application for a banking license with the Reserve Bank of India in June 2013. We intend to partner with Sumitomo Mitsui Trust Bank and Nippon Life Insurance, two leading financial institutions from Japan, in this endeavour. The foreign partners propose to take between 4 – 5 per cent stake each in the proposed new bank, subject to necessary regulatory approvals. Both partners have vast experience in the financial services' businesses in Asia, and we are extremely happy to partner with them for our proposed new bank.
We have drawn up exciting growth plans for the next three to five years:
1. Increase our customer base – from 20 million to 50 million
2. Increase the distribution reach – from 5,000 to 25,000 cities and towns
3. Increase the number of business partners – from half a million to one million
Together, these initiatives will further accelerate our growth and lead to substantial value creation for all.
Reliance Capital has always maintained the highest 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