<dhhead>Directors' Report</dhhead>
Dear Shareowners,
The Reserve Bank of India (RBI) vide Press Release dated November 29,
2021 in exercise of the powers conferred under Section 45-IE (1) of the Reserve Bank of
India Act, 1934 (RBI Act) superseded the Board of Directors of your Company on November
29, 2021 and thereafter appointed Mr. Nageswara Rao Y, ex-Executive Director of Bank of
Maharashtra as the Administrator of your Company under Section 45-IE (2) of the RBI Act.
Thereafter, RBI vide its Press Release dated November 30, 2021, in exercise of the powers
conferred under Section 45-IE 5(a) of the RBI Act, constituted a three (3) member
Advisory Committee to assist the Administrator in discharge of his duties and further to
also advise the Administrator in the operations of your Company during the Corporate
Insolvency Resolution Process (CIRP). The Advisory Committee initially comprised of Mr.
Sanjeev Nautiyal, Mr. Praveen P Kadle and Mr. Srinivasan Varadarajan. The Advisory
Committee was reconstituted on February 17, 2023 upon resignation of Mr. Srinivasan
Varadarajan and now comprises of Mr. Sanjeev Nautiyal, ex-DMD, State Bank of India, Mr.
Praveen P Kadle, ex-MD & CEO, Tata Capital Limited and Mr. Vikramaditya Singh Khichi
ex-ED, Bank of Baroda. As per the framework of the Advisory Committee as approved by RBI,
primary responsibility of the Advisory Committee is to guide the Administrator to
undertake all steps that will maximize the value for all stakeholders of your Company
through a successful resolution. On December 2, 2021, the RBI had filed the Petition
before the Hon'ble National Company Law Tribunal, Mumbai Bench
("NCLT/Adjudicating Authority") under sub-Clause (i) of clause (a) of Rule 5 of
the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service
Providers and Application to Adjudication Authority) Rules, 2019 (FSP Rules) to initiate
Corporate Insolvency Resolution Process ("CIRP") against your Company read with
Section 227 of the Insolvency and Bankruptcy Code, 2016 read with the Rules and
Regulations framed there under and amended from time to time (the "Code").
Further, CIRP was initiated against the Company under Section 227 read with clause (zk) of
sub section (2) of Section 239 of the Code and read with Rules 5 and 6 of the FSP Rules by
an order dated December 6, 2021, of the NCLT. In accordance with Section 14 of the Code
read with the FSP Insolvency Rules, a moratorium has been effective on and from December
6, 2021, i.e. the date of admission of the Company in the CIRP process for prohibiting
institution of suits or continuation of pending suits or proceedings against the Company
including execution of any judgement, decree or order in any court of law, tribunal,
arbitration panel or other authority. The Administrator has taken steps for seeking
confirmations from various forums where litigations have been levied on the Company for
disposal of assets, that such injunctions will not be applicable during CIRP. The
Adjudicating Authority vide the above order, appointed the Administrator to perform all
the functions of a Resolution Professional to complete the CIRP of the Company as required
under the provisions of the Code. It is also incumbent upon the Administrator, (exercising
same powers as Resolution Professional under the Code), under Section 20 of the Code, to
manage the operations of the Company as a going concern.
Financial Performance and State of Company's Affair
The Financial performance of the Company for the financial year ended
March 31, 2023 is summarised below:
( ` in lakh)
|
Standalone |
Consolidated |
Particulars |
March 31, |
March 31, |
March 31, |
March 31, |
|
2023 |
2022* |
2023 |
2022* |
Total Revenue |
2 098 |
1 593 |
19 31 295 |
19 30 132 |
Profit / (Loss) Before |
(1 70 770) |
(1 10 580) |
(1 65 427) |
(7 90 780) |
Tax |
|
|
|
|
Tax Expense |
- |
- |
10 514 |
14 694 |
Profit / (Loss) After |
(1 70 770) |
(1 10 580) |
(1 75 941) |
(8 05 474) |
Tax |
|
|
|
|
Closing surplus / (deficit) in statement of
profit and loss |
(21 54 534) |
(19 83 764) |
(22 81 012) |
(30 84 387) |
Transfer to Statutory reserve fund** |
- |
- |
- |
- |
* Previous year figures has been regrouped / reclassified wherever
required.
**No amount was transferred to the Statutory Reserve Fund pursuant to
Section 45-IC of the Reserve Bank of India Act, 1934, as the Company has incurred loss
during the year.
Corporate Insolvency Resolution Process
The Administrator under Section 13 of the Code read with Regulation 6
of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of
Corporate Persons) Regulations, 2016 (CIRP Regulations) had issued a public announcement
as prescribed in Form A on December 8, 2021 for bringing to the Notice of the creditors of
your Company to submit their claims against your Company as per the relevant forms under
the code. The Administrator, on receipt of the claims from the creditors has prepared a
list of creditors (including Financial, Operational, Workmen & Employees and Other
Creditors) along with their security Interest therein pursuant to Regulation 13(2)(c) of
the CIRP Regulations and such list of creditors has been made available to the
stakeholders on your Company's website. The claims have been admitted based on the
information available in the books of accounts and records available with your Company and
the information provided by the respective creditors in this regard. It is pertinent to
note that mere admission of claims does not guarantee payment and the claims are subject
to revision / modification till such date as they are finalized. The Administrator after
preparing the list of claims of the creditors of the Company has constituted of the
Committee of Creditors (COC) of your Company under Section 21 of the Code read with
Regulation 17 of the CIRP Regulations.
The Committee of Creditors comprised of unrelated financial creditors
of your Company as per Section 21 of the Code read with Regulation 17 of the CIRP
Regulations. The Committee of Creditors has met 50 (Fifty) times since initiation of CIRP
till the date of this Report. As part of CIRP of your Company, the Administrator, Advisory
Committee and the present management team have taken various initiatives to ensure
going concern' status of your Company as required under Section 20 of the Code.
Further, the Code and CIRP Regulations stipulates the requirement of prior approval by the
Committee of Creditors for certain actions to be taken during the process, including as
provided under Section 28 of the Code. The Administrator and the Advisory Committee as set
up by the RBI to assist the Administrator in discharge of his duties, exercise oversight
on the operations of your Company apart from conducting the CIRP in accordance with the
provisions of the Code and Regulations under IBC, 2016.
The Administrator has appointed Deloitte India Insolvency Professionals
LLP and AZB & Partners as Process and Legal advisors, respectively to assist him in
completion of the CIRP of your Company.
Key Events:
Date |
Particulars |
June 2, 2022 |
The Hon'ble National Company Law
Tribunal, Mumbai, vide its order dated June 2, 2022 in IA 1240/2022 of CP(IB)1231/MB/2021,
extended the timeline for completion of CIRP by a period of 90 days i.e. till September 2,
2022. |
August 12, 2022 |
The Hon'ble National Company Law
Tribunal, Mumbai, vide its order dated August 12, 2022 in IA 2186/2022 IA 2207/2022 in
C.P. (IB)/1231(MB)2021, extended the timeline for completion of CIRP by a period of 60
days i.e., till November 1, 2022. |
October 18, 2022 |
The Hon'ble National Company Law
Tribunal, Mumbai, vide its order dated October 18, 2022 in IA 1838/2022 IA 2186/2022 IA
2901/2022 IN C.P./ (IB)/1231/(MB)2021, has granted exclusion of 90 days for completion of
CIRP till January 31, 2023. |
October 20, 2022 |
Revised Final List of Eligible Prospective
Resolution Applicants pursuant to the Regulation 36A (12) of IBBI (Insolvency Resolution
Process for Corporate Persons) Regulations 2016. |
October 22, 2022 |
Applications filed before the NCLT under
Section 60(5) and Section 66(2) of the Code on October 22, 2022. |
January 3, 2023 |
Interim order passed by the Hon'ble
National Company Law Tribunal, Mumbai Bench ("Hon'ble NCLT") in the matter
of Petition no. I.A 1 of 2023 filed by Torrent Investment Private Limited. |
January 31, 2023 |
The Hon'ble National Company Law
Tribunal, Mumbai, vide its order dated January 31, 2023 in matter IA 370 /2023 C.P. (IB) /
1231 (MB) 2021, granted 45 days exclusion from the date of CIRP i.e., till March
17, 2023. |
Date |
Particulars |
February 2, 2023 |
The Hon'ble National Company Law
Tribunal, Mumbai Bench disposed of Interlocutory Application ("IA") No.01 of
2023, IA No. 99 of 2023 and IA No. 150 of 2023, pursuant to its order dated February 2,
2023 and subsequently corrected by its order dated February 3, 2023. |
February 17, 2023 |
RBI press release 2022-2023/1744 dated
February 17, 2023, re-constituted the Advisory Committee. Mr. Vikramaditya Singh Khichi
was appointed upon the resignation of Mr. Srinivasan Varadarajan. |
March 2, 2023 |
Order passed by the Adjudicating Authority
(National Company Law Tribunal), Mumbai Bench in I.A. No. 1/MB/C-I/2023 and I.A. No.
99/MB/C-I/2023 and I.A. No. 150/MB/CI/ 2023 in C.P. (IB) No.1231/ MB/C-I/2021 granting 30
days exclusion for completion of CIRP till April 16, 2023. |
April 12, 2023 |
The Hon'ble National Company Law
Tribunal, Mumbai, vide its order dated April 12, 2023 in matter IA No. 1362 of 2023 in
CP(IB) 1231 of 2021, granted exclusion of 90 days for completion of CIRP till July 16,
2023. |
April 26, 2023 |
Extended challenge mechanism process of
the Company ("ECM") was duly conducted. |
May 4, 2023 |
Hon'ble National Company Law Tribunal
bench at Mumbai ("NCLT") by its Order dated May 4, 2023 in the case of Reliance
Capital Limited, Through its Administrator Mr. Nageswara Rao Y v. IDBI Trusteeship
Services Limited in IA No. 1286/MB/2022 in C.P (IB) No. 1231/MB/2021 directed IDBI
Trusteeship Services Limited to handover the possession of 25,15,49,920 shares (100%
equity shares) of Reliance General Insurance Company Limited to the Administrator of
Reliance Capital Limited. |
July 12, 2023 |
Application filed under Section 30(6) of
the Insolvency and Bankruptcy Code, 2016 ("Code") for submission of resolution
plan of IndusInd International Holdings Limited ("IIHL"), as approved by the
Committee of Creditors of Reliance Capital Limited, with the Adjudicating Authority i.e.
Hon'ble National Company Law Tribunal ("NCLT"), Mumbai Bench via e-filing on July
12, 2023. |
The Advisory Committee have met 14 (fourteen) times during the year
2022-23 and the Committee of Creditors have met 50 (fifty) times since commencement of
CIRP.
Resources and Liquidity
The Company has not borrowed any funds since August 2019.
Core Investment Company
The Company is a Core Investment Company (CIC') registered
with Reserve Bank of India under the Master Direction Core Investment Companies
(Reserve Bank) Directions, 2016.
Dividend
Owing to the loss incurred by your Company for the financial year under
review, no dividend has been declared/recommended on Equity Shares for the financial year
ended March 31, 2023.
Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review as
stipulated under the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (the Listing Regulations') and
Master Direction Core Investment Companies (Reserve Bank) Directions, 2016 is
presented in a separate section, forming part of this Annual Report.
Deposits
The Company has neither accepted nor renewed any fixed deposits during
the year. There are no unclaimed deposits, unclaimed / unpaid interest, refunds due to the
deposit holders or to be deposited to the Investor Education and Protection Fund as on
March 31, 2023.
Particulars of Loans, Guarantees or Investments
The Company is registered as Core Investment Company with RBI. Thus,
the provision of Section 186 except sub-section (1) of the Companies Act 2013 (the
Act') is not applicable to the Company.
Promoter and Persons belonging to Promoter Group
During the year, the Company had received a request from Promoter
and Persons belonging to Promoter Group' of the Company, seeking reclassification as
Public' under Regulation 31A of the Listing Regulations. The Promoter and
Persons belonging to Promoter Group seeking reclassification, together hold 22,26,366
equity shares of the Company constituting approximately 0.88%, which is not more than one
percent of the total voting rights in the Company. The Company had submitted the
application with respect to reclassification under Regulation 31A(3) of the Listing
Regulations with the stock exchanges viz. BSE Limited and the National Stock Exchange of
India Limited and response from the stock exchanges is awaited.
Subsidiary and Associate companies
During the year under review, there are no companies which have become
Subsidiary / Associate company of the Company. The Company had sold its holding in wholly
owned subsidiary viz. Reliance Commercial Finance Limited (RCFL) to Authum Investment and
Infrastructure Limited in pursuance of the implementation of the resolution plan of RCFL
in terms of the Reserve Bank of India (Prudential Framework for Resolution of Stressed
Assets) Directions, 2019. Consequently, RCFL and Gulfoss Enterprises Private Limited a
subsidiary of RCFL, have ceased to be subsidiaries of the Company w.e.f. October 14, 2022
and Global Wind Power Limited and Reinplast Advanced Composites Private Limited, have
ceased to be associates of the Company w.e.f. October 14, 2022.
The summary of the performance and financial position of each of the
subsidiary and associate companies are presented in Form AOC-1 and of major subsidiaries
and associates are mentioned in Management Discussion and Analysis Report forming part of
this Annual Report. Also, a report on the performance and financial position of each of
the subsidiary and associate companies as per the Act is provided in the consolidated
financial statement. The Policy for determining material subsidiary companies may be
accessed on the Company's website at h tt p s : //w w w. re l i a n ce ca p i ta l .
co . i n /p d f / Po l i c y - fo r -Determination-of-Material-Subsidiary.pdf.
Standalone and Consolidated Financial Statement
The audited financial statement of the Company drawn up, both on
standalone and consolidated basis, for the financial year ended March 31, 2023, are in
accordance with the requirements of the Companies (Indian Accounting Standards) Rules,
2015, the ("Ind AS Rules") prescribed under Section 133 of the Companies Act,
2013, read with the relevant rules and other accounting principles. The Consolidated
Financial Statement have been prepared in accordance with Ind AS and relevant provisions
of the Act based on the financial statement received from subsidiary and associate
companies, as approved by their respective Board of Directors.
Directors
The Reserve Bank of India (RBI) vide Press Release dated November 29,
2021 in exercise of the powers conferred under Section 45-IE (1) of the Reserve Bank of
India Act, 1934 (RBI Act) superseded the Board of Directors of your Company on
November 29, 2021 and the RBI appointed Mr. Nageswara Rao Y as the Administrator of your
Company under Section 45-IE (2) of the RBI Act.
Pursuant to Section 45-IE (4)(b) of the RBI Act, all the powers,
functions and duties, which may, by or under the provisions of the RBI Act or any other
law for the time being in force, be exercised and discharged by or on behalf of the Board
of Directors of such non-banking financial company or by a resolution passed in general
meeting of such non-banking financial company, shall, until the Board of Directors of such
company is reconstituted, be exercised and discharged by the Administrator referred to in
sub-section (2) of Section 45-IE of the RBI Act.
Thereafter, RBI vide its Press Release dated November 30, 2021, in
exercise of the powers conferred under Section 45-IE 5(a) of the RBI Act, constituted a 3
(three) member Advisory Committee to assist the Administrator in discharge of his duties
and to advise the Administrator in the operations of your Company during the Corporate
Insolvency Resolution Process (CIRP). Presently, the members of the Advisory Committee are
Mr. Sanjeev Nautiyal, ex-DMD, State Bank of India, Mr. Praveen P Kadle, ex-MD & CEO,
Tata Capital Limitedand Mr. Vikramaditya Singh Khichi ex-ED, Bank of Baroda.
Key Managerial Personnel
During the year under review, Mr. Aman Gudral was appointed as Chief
Financial Officer of the Company with effect from April 12, 2022, upon cessation of
Mr. Vijesh Thota as Chief Financial Officer with effect from April 11, 2022.
Evaluation of Directors, Board and Committees
The Reserve Bank of India in exercise of its powers conferred under
Section 45-IE (1) of the Reserve Bank of India Act, 1934, vide its notification dated
November 29, 2021, superseded the
Board of Directors of the Company and all the Directors of the Company
vacated their office and Committees constituted by the Board stood dissolved on November
29, 2021. In view of the above, evaluation of performance of Directors, Board or the
Committees could not be carried out and no separate meeting of Independent Directors could
be held.
Policy on appointment and remuneration for Directors, Key Managerial
Personnel and Senior Management Employees
The Company has devised a policy for selection, appointment and
remuneration of Directors, Key Managerial Personnel and Senior Management Employees and
has also formulated the criteria for determining qualifications, positive attributes and
independence of Directors. The Policy has been put up on the Company's website at
https://www.reliancecapital.co.in/Policies.aspx.
Directors' Responsibility Statement
The financial statements of your Company for the financial year ended
March 31, 2023 have been taken on record by the Administrator while discharging the powers
of the erstwhile Board of Directors of your Company which were conferred upon him by the
RBI vide its press release dated November 29, 2021 and subsequently, powers conferred upon
him in accordance with the NCLT Order dated December 6, 2021 to run your Company as a
going concern during CIRP. Hence the financial statements for the year ended March 31,
2023, have been prepared on "going concern" assumptions.
The Administrator has relied on information, data, and clarification
provided by Key Managerial Personnel (KMP's) of the Company for the purpose of the
financial results.
The Administrator has signed the financial statements solely for the
purpose of compliance and discharging the powers of the Board of Directors during the CIRP
period of your Company and in accordance with the provisions of the Companies Act, 2013,
IBC, read with the relevant regulations and rules thereunder and subject to the following:
(i) The Administrator has taken charge with effect from November 29, 2021 and therefore
was not in control of the operations or the management of the Company prior to November
29, 2021; (ii) The Administrator has furnished and signed the report in good faith and
accordingly, no suit, prosecution or other legal proceeding shall lie against the
Administrator in terms of Section 233 of the Code; (iii) The Administrator, while signing
this statement of financial statements for the year ended March 31, 2023, has relied
solely upon the assistance provided by the existing staff and present Key Managerial
Personnel (KMPs) of the Company in review of the financial statements as well as the
certifications, representations and statements made by the KMPs of the Company, in
relation to these financial results. The statement of financial results of the Company for
the year ended March 31, 2023 have been taken on record by the Administrator solely on the
basis of and on relying on the aforesaid certifications, representations and statements of
the aforesaid existing staff and present key management personnel (KMPs). For all such
information and data, the Administrator has assumed, without any further assessment, that
such information and data are in conformity with the Companies Act, 2013 and other
applicable laws with respect to the preparation of the financial results and that they
give a true and fair view of the position of the Company as of the dates and period
indicated therein.
Further, in order to comply with the provisions of Section 134(5) of
the Companies Act, 2013, the Administrator further confirms that: i. In the preparation of
the annual financial statement for the financial year ended March 31, 2023, the applicable
Accounting Standards had been followed along with proper explanation relating to material
departures, if any; ii. The Administrator had selected such accounting policies and
applied them consistently and made judgments and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the Company as at March 31,
2023 and of the loss of the Company for the year ended on that date; iii. The
Administrator had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities; iv. The Administrator had laid down proper internal financial controls to
be followed by the Company and such financial controls are adequate and are operating
effectively; and v. The Administrator had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems are adequate and operating
effectively.
Contracts and Arrangements with Related Parties
All contracts / arrangements / transactions entered into / by the
Company for the financial year ended March 31, 2023, with related parties were on an
arm's length basis and in the ordinary course of business.
There were no materially significant related party transactions which
could have potential conflict of interest with the Company at large.
During the year, the Company has not entered into any contract /
arrangement / transaction with related parties which could be considered material in
accordance with the policy of Company on materiality of related party transactions or
which is required to be reported in Form AOC 2 in terms of section 134 (3)(h) read
with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The policy on Related Party Transactions as approved by the Board is
uploaded on the Company's website at the link http://www.
reliancecapital.co.in/pdf/Policy_for_Related_Party_Transaction. pdf.
Your attention is drawn to Note No. 35 to the Standalone Financial
Statement which sets out related party disclosures pursuant to Ind-AS and Schedule V of
Listing Regulations.
As part of the CIRP, your Company is required to undertake Related
Party Transactions only after the approval of the Committee of Creditors as per the
provisions of Section 28 of the Code. Accordingly, your Company has identified related
parties as per Section 5(24) of the Code and appropriate approvals were sought from the
Committee of Creditors for such transactions.
Material Changes and Commitments if any, affecting the financial
position of the Company
There were no material changes and commitments affecting the financial
position of the Company which have occurred between the end of the financial year and the
date of this Report.
Meetings of the Board
Due to supersession of Board of Directors by RBI no Board Meetings were
held during the year 2022-23. Further, 14 (fourteen) Advisory Committee meetings were held
during the year 2022-23.
Audit Committee and other board committees
Pursuant to the RBI superseding the Board of Directors of the Company
on November 29, 2021, all Committee's of the Company stood dissolved. Accordingly,
the Administrator alongwith the Advisory Committee oversee the responsibility of the Audit
Committee and other Board Committees.
Auditors and Auditors' Report
At the 35th Annual General Meeting (AGM) of the Company held
on September 14, 2021, the members of the Company had appointed M/s. Gokhale & Sathe,
Chartered Accountants to hold office as Statutory Auditors for a period of three
consecutive years till the conclusion of the 38th Annual General Meeting.
As per the requirements of Guidelines dated April 27, 2021, issued by
the Reserve Bank of India (RBI) for Appointment of Statutory Central Auditors (SCAs) /
Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including
HFCs), the Company has received a declaration from M/s. Gokhale & Sathe, Chartered
Accountants, confirming their eligibility to continue to act as Statutory Auditors of the
Company.
The Auditors in their Report to the Members, have given the following
qualified opinion and the response of the Administrator with respect to them are as
follows:-
1. Opinion on provision for impairment loss on assets and write back of
liabilities - The Company is undergoing CIRP under the provisions of IBC. As per the
provisions of IBC, the fair value and liquidation value of the assets of the Company as on
the insolvency commencement date is required to be determined. The valuation reports have
been received. The Management and the Administrator have represented that the liquidation
value of the assets is higher than the book values and therefore no impairment is called
for as at March 31, 2023. However, on completion of the CIRP, the Company will consider
carrying out a comprehensive review of all the assets including investments, other assets
and intangible assets, liabilities and accordingly provide for impairment loss on assets
and write back of liabilities, if any. Though these have been placed before the Committee
of Creditors, these have not been provided for audit on grounds of confidentiality.
Consequently, we are unable to comment on the impact thereof on the Statement, if any.
2. Opinion on the amount of the claims including claims on account of
corporate guarantees invoked, admitted or to be admitted by the Administrator may differ
from the amount reflecting in the books of account of the Company. The NCLT by its order
dated April 12, 2023 has granted extension for completion of CIRP till July 16, 2023 and
therefore pending final outcome of the CIRP, no adjustments have been made in the books
for the differential amounts, if any, in the claims admitted as on the date of the
financial results as compared to the liabilities reflected in the books of account of the
Company.
3. Opinion on Interest Expenses - In view of the ongoing CIRP, the
Company has provided for interest expense on financial liabilities which may be applicable
on the financial debt only upto December 6, 2021. Accordingly, interest expense pertaining
to the year ended March 31, 2023 amounting to
` 1,60,859 lakh has not been recognised. Had such interest been
recognised, the loss before tax for year ended March 31, 2023 would have been higher by `
1,60,859 lakh. Further, the aggregate interest expense not recognized by the Company post
December 6, 2021 is ` 2,09,949 lakh and had such interest been recognized, the net worth
of the Company as at March 31, 2023 would have been lower by
` 2,09,949 lakh.
4. Opinion on CoC discussions and its implications on financial
statements - Certain information including the minutes of meetings of the Committee of
Creditors are confidential in nature and accordingly has not been shared with Auditors.
The Administrator and the management has confirmed that the CoC discussions held during
the year do not have any implications on the financial statements since resolution plan is
yet to be approved by the CoC.
5. Opinion on Material Uncertainties related to Going Concern The
Company has been admitted under the CIRP effective December 06, 2021 and as stipulated
under Section 20 of the IBC, it is incumbent upon the Administrator to manage the
operations of the Company as a going concern. The last date for completion of CIRP process
has been extended by the NCLT to July 16, 2023. Accordingly, the Standalone Financial
Statements for the year ended March 31, 2023 have been prepared on going concern basis.
However, the Company has defaulted in repayment of the obligations to the lenders and
debenture holders which are outstanding, has incurred losses during the period as well as
during the previous periods, has reported negative net worth as at March 31, 2023 and
previous periods and as described in Note no. 15 of the Standalone Financial Statements,
the asset cover for Listed Secured Non-Convertible Debentures of the Company has fallen
below one hundred per cent, which indicates that material uncertainty exists, that may
cast significant doubt on the Company's ability to continue as a Going Concern.
Response to Qualification Your Company is under CIRP and all claims and repayment
obligations to lenders and debenture holders and impairment loss on assets and write back
of liabilities shall be dealt as per CIRP. No fraud has been reported by the Auditors to
the Administrator.
Secretarial Audit and Secretarial Compliance Report
Pursuant to the provisions of Section 204 of the Act read with the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company
had appointed M/s. Aashish K. Bhatt & Associates, Practicing Company
Secretaries, to undertake the Secretarial Audit of the Company. The Audit Report of the
Secretarial Auditors of the Company and its material subsidiary for the financial year
ended March 31, 2023 are attached hereto as Annexures A1 and
A2. Pursuant to Regulation 24A of the Listing Regulations, the Company
has obtained Annual Secretarial Compliance Report from a Practicing Company Secretary on
compliance of all applicable SEBI Regulations and circulars / guidelines issued there
under and the same were submitted with the Stock Exchanges. The observations and comments
given by the Secretarial Auditor in their Report are self-explanatory and hence do not
call for any further comments under Section 134 of the Act.
Secretarial Standards
During the year under review, the Company has complied with the
applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Maintenance of Cost Records
The Central Government has not specified maintenance of cost records,
for any of the products of the Company, under Section 148(1) of the Act.
Annual Return
As required under Section 134(3)(a) of the Act, the Annual Return for
the financial year 2022-23, is put up on the Company's website and can be accessed at
https://www.reliancecapital. co.in/ Annual-Reports.aspx.
Particulars of Employees and related disclosures (a) Employees Stock
Option Scheme(s)
Employees Stock Option Scheme(s) (ESOS 2015 and ESOS 2017) were
approved and implemented by the Company and Options were granted to the employees in
accordance with guidelines applicable to ESOS. The existing ESOS Scheme and Plans are in
compliance with the Securities and Exchange Board of India (Share Based Employee Benefits
and Sweat Equity) Regulations, 2021 (SEBI Regulations). The Company has received a
certificate from the Secretarial Auditors of the Company that the ESOS 2015 and ESOS 2017
have been implemented in accordance with the SEBI Regulations and as per the resolution
passed by the members of the Company authorising issuance of the said Options. The details
as required to be disclosed under SEBI Regulations are put on the Company's website
at http://www.reliancecapital.co.in/ESOS-Disclosure.aspx.
(b) Other Particulars
In terms of the provisions of Section 197(12) of the Act read with Rule
5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, as amended, a statement showing the names and other particulars of the
employees drawing remuneration in excess of the limits set out in the said Rules are
provided in the Annual Report, which forms part of this Report. Disclosures relating to
the remuneration and other details as required under Section 197(12) of the Act read with
Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, as amended, are also provided in the Annual Report, which forms part of this Report.
However, having regard to the provisions of second proviso to Section 136(1) of the Act,
the Annual Report excluding the aforesaid information is being sent to all the members of
the Company and others entitled thereto. The said information is available for inspection
up to the date of the Meeting. Any member interested in obtaining the same may write to
the Company Secretary and the same will be furnished on request.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The Company is a Non-Banking Financial Company and does not involve in
any manufacturing activity, most of the information as required under Section 134(3)(m) of
the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 are not applicable.
However, the information as applicable has been given in Annexure B forming part of
this Report.
Corporate Governance
The report on Corporate Governance as stipulated under Regulation 34(3)
read with Para C of Schedule V of the Listing Regulations and Master Direction Core
Investment Companies (Reserve Bank) Directions, 2016, as amended, is presented in separate
section forming part of this Annual Report. A Certificate from M/s. Aashish K. Bhatt &
Associates, Practicing Company Secretaries confirming compliance to the conditions of
Corporate Governance as stipulated under Para E of Schedule V of the Listing Regulations
is enclosed to this Report.
Ombudspersons & Whistle Blower (Vigil Mechanism)
The Company has formulated an Ombudspersons & Whistle Blower (Vigil
Mechanism) policy. No person has been denied for direct access to the Administrator. The
details of the same have been stated in the Report on Corporate Governance and the policy
can be accessed on the Company's website. Further, every individual has access to
Administrator at his personal e-mail id that has been provided vide public announcement.
During the CIRP, the Administrator intends to implement the relevant
guidelines in true spirit.
Risk Management
The Company has laid down a Risk Management Policy to identify the
inherent risks, assess, evaluate and monitor these risks continuously and undertake
effective steps to manage these risks. More details on Risk Management indicating
development and implementation of Risk Management Policy including identification of
elements of risk and their mitigation are covered in Management Discussion and Analysis
section, which forms part of this Report.
Compliance with provisions of Sexual Harassment of Women at workplace
(Prevention, Prohibition and Redressal) Act, 2013
The Company is committed to uphold and maintain the dignity of woman
employees and it has in place a policy which provides for protection against sexual
harassment of women at work place and for prevention and redressal of such complaints.
During the year, no such complaints were received. The Company has also constituted an
Internal Complaints Committee under the Sexual Harassment of Women at workplace
(Prevention, Prohibition and Redressal) Act, 2013.
Corporate Social Responsibility
Pursuant to the RBI superseding the Board of Directors of the Company
on November 29, 2021, all Committee's of the Company stood dissolved. Accordingly,
the Administrator alongwith the Advisory Committee overlook the responsibility of the CSR
Committee.
Your Company has in place a Corporate Social Responsibility Policy (CSR
Policy), as per the provisions of the Companies Act,
2013 and the Companies (Corporate Social Responsibility Policy) Rules,
2014, as amended, which lays down the activities to be undertaken by the Company. The CSR
policy may be accessed on the Company's website at the link;
https://www.reliancecapital. co.in/Policies.aspx. The disclosures with respect to CSR
activities are given in Annexure - C.
Significant and material Orders passed by the Regulators or Courts or
Tribunal
Reserve Bank of India ("RBI"), in exercise of its powers
under Section 45-IE(1) of the Reserve Bank of India Act, 1934 ("RBI Act")
superseded the Board of Directors of Reliance Capital Limited ("Company") on
November 29, 2021. Accordingly, the RBI appointed Mr. Nageswara Rao Y as the administrator
of the Company under Section 45-IE(2) of the RBI Act.
The Company is under CIRP in accordance with IBC code, 2016 read with
IBC (Financial service Provider) Rules, 2019 and Mumbai bench of NCLT has passed order
dated December 06, 2021 according to which the Company is under moratorium under
Section 14 of the Code pursuant to which the following actions are prohibited; (a)
institute suits or continue pending suits or proceedings against the corporate debtor
including execution of any judgment, decree or order in any court of law, tribunal,
arbitration panel or other authority; (b) transfer, encumber, alienate or dispose of any
of its assets or any legal right or beneficial interest therein; (c) any action to
foreclose, recover or enforce any security interest created by the corporate debtor in
respect of its property including any action under the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002; (d) recovery of any
property by an owner or lessor where such property is occupied by or in the possession of
the corporate debtor.
As disclosed previously, the Company was prohibited from making any
payment to secured or unsecured creditors and to dispose of, alienate, encumber either
directly or indirectly or otherwise part with the possession, of any assets except in the
ordinary course of business such as payment of salary and statutory dues, vide (a) orders
dated December 3, 2019 and December 5, 2019 passed by the Hon'ble Debts Recovery
Tribunal; (b) orders dated November 20, 2019 and March 15, 2021 passed by the Hon'ble
Delhi High Court; and, Orders dated November 28, 2019, November 4, 2020, and March 5, 2021
passed by the Hon'ble Bombay High Court.
The Administrator has taken steps for seeking confirmations from
various forums where litigations have been levied on the Company for disposal of assets,
that such injunctions will not be applicable during CIRP.
Internal Financial Control Systems and their adequacy
The Company has in place adequate internal financial control systems
across the organisation. The same is subject to periodical review by the Administrator
& Advisory Committee for its effectiveness. During the year, such controls were tested
and no reportable material weakness in the design or operation was observed.
General
During the year under review there were no reportable events in
relation to issue of equity shares with differential rights as to dividend, voting or
otherwise, issue of sweat equity shares to the Company's Directors or Employees and
one-time settlement with any Bank or Financial Institution.
On account of Company being under CIRP, trading in its equity
shares has been restricted in terms of BSE notice no.
20220520-52andNSENoticeNo.NSE/SURV/52368bothdated May 20, 2022, on Additional Surveillance
Measure (ASM) for Companies relating to the Insolvency Resolution Process (IRP) as per
Insolvency and Bankruptcy Code (IBC).
Acknowledgment
Your Company would like to express their sincere appreciation for the
co-operation and assistance received from Advisory Committee, shareholders, debenture
holders, debenture trustee, bankers, financial institutions, regulatory bodies and other
business constituents during the year under review. Your Company also wishes to place on
record their deep sense of appreciation for the commitment displayed by all executives,
officers and staff.
For and on behalf of Reliance Capital Limited
Nageswara Rao Y
Administrator of Reliance Capital Limited Mumbai July 30, 2023
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