The Board of Directors of the Company are pleased to present the 25th (Twenty-Fifth) Annual Report and the Company’s audited financial statements for the financial year ended March 31,2023.
Financial Results
The Company’s financial performance (standalone and consolidated), for the financial year ended March 31,2023 is summarised below:
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Rs in Cr
|
| |
Stand
|
alone
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Consolidated*
|
|
Particulars
|
2022-23
|
2021-22
|
2022-23
|
|
Revenue from Operations
|
41.63
|
148.61
|
41.63
|
|
Other Income
|
3.21
|
35.65
|
3.21
|
|
Total Income
|
44.84
|
184.26
|
44.84
|
|
Less: Expense
|
5.56
|
7.14
|
5.56
|
|
Operating income
|
39.28
|
177.12
|
39.28
|
|
Less: ECL & contingent provision on standard assets
|
(10.06)
|
0.25
|
(10.06)
|
|
Profit before tax
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49.34
|
176.87
|
49.34
|
|
Less: Current Tax
|
8.70
|
10.20
|
8.70
|
|
Deferred Tax
|
9.39
|
(1.37)
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9.39
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|
Profit for the year
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31.25
|
168.04
|
31.25
|
|
Add: Opening Balance in Retained Earnings and OCI (Adjusted)
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1027.30
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892.96
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1027.30
|
|
Less: Appropriation
|
|
|
|
|
- Dividend paid
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888.92
|
-
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888.92
|
|
- T ransfer to reserves
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6.30
|
33.70
|
6.30
|
|
Closing Balance of Retained Earnings and OCI
|
163.33
|
1027.30
|
163.33
|
|
*Since these are the first year of consolidated financial statements, the previous year numbers have not been given
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Transfer to Reserves
The Company has transferred an amount of Rs. 6.30 crore to Statutory Reserve fund (pursuant to Section 45 IC of the Reserve Bank of India Act, 1934) for the year under review.
Operations and State of Company’s affairs
The Company is a Non-Banking Financial Company registered with the Reserve Bank of India and engaged in business of finance, trading in futures and options, trading / investments in shares and securities.
Scheme of Arrangement between Reliance Industries Limited and the Company
The Board of Directors of the Company at its meeting held on November 15, 2022 had approved the Scheme of Arrangement between i) Reliance Industries Limited and its shareholders and creditors; ("Demerged Company” or "RIL”) & ii) the Company and its shareholders and creditors ("Company” or "Resulting Company”); ("Scheme”)
The Scheme, inter alia, provides for:
a. demerger, transfer and vesting of the Financial Services Business (Demerged Undertaking as defined in the Scheme) from the Demerged Company into the Company on a going concern basis and issue of 1 (One) fully paid-up equity share of the Resulting Company having face value of Rs. 10 (Rupees Ten) each for every 1 (One) fully paid-up equity share of Rs. 10 (Rupees Ten) each of the Demerged Company, as consideration thereof, in accordance with the provisions of Section 2(19Aa) of the Income Tax Act, 1961;
b. listing of equity shares of the Company on BSE Limited and National Stock Exchange of India Limited; and
c. reduction and cancellation of the entire pre-scheme share capital of the Company.
The Hon’ble National Company Law Tribunal, Mumbai bench vide order dated June 28, 2023 has approved the Scheme. The Appointed Date for the Scheme is closing business hours of March 31,2023. The Effective Date for the Scheme is July 1,2023.
Material changes affecting the Company
There have been no other material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this Report. There has been no change in the nature of business of the Company.
Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review, as stipulated in Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, dated September 01,2016 ("the Master Directions”) is presented in a separate section, forming part of this Annual Report.
Corporate Governance Report
Corporate Governance Report for the year under review, as stipulated in Reserve Bank of India ("RBI”) circular on Scale Based Regulation ("SBR”): "A Revised Regulatory Framework for NBFCs dated October 22, 2021” read with RBI Circular on "Disclosures in Financial Statements - Notes to Accounts of NBFCs dated April 19, 2022” is presented in a separate section, forming part of this Annual Report.
Dividend
The Board of Directors of the Company had declared an interim dividend of Re 0.09/- per 9% Non-Cumulative Compulsorily Convertible Preference Shares (“CCPS”) of the face value of Re 1/- each and of Rs. 4400/- per equity share of face value of Rs. 10/- each..
The Board of Directors of the Company has not recommended final dividend on equity shares of the Company for the financial year under review.
The interim dividend paid during the year under review is in accordance with the Company’s Dividend Policy.
Subsidiaries, Joint Ventures and Associate Companies
The investments of Reliance Industries Limited (“RIL”) in Reliance Industrial Investments and Holdings Limited (“RIIHL”), Reliance Retail Insurance Broking Limited (“RRIBL”) and Jio Payment Bank Limited (“JPBL”) stood transferred and vested in the Company effective from the Appointed Date i.e the closing business hours of March 31, 2023.
Further, RIIHL’s wholly owned subsidiaries namely Reliance Retail Finance Limited, Reliance Payment Solutions Limited, Jio Infrastructure Management Services Limited and Jio Information Aggregator Services Limited as on March 31, 2023 shall also become Subsidiaries of the Company effective from the closing business hours of March 31,2023.
During the year under review, no other Company has become or ceased to be Company’s subsidiary, joint venture or associate of the Company.
A statement providing details of performance and salient features of the financial statements of Subsidiary / Associate / Joint Venture companies, as per Section 129(3) of the Act, is provided as Annexure A to the consolidated financial statement and therefore not repeated in this Report to avoid duplication.
Consolidated Financial Statement
In accordance with the provisions of the Companies Act, 2013 (“the Act”) read with Ind AS-110-Consolidated Financial Statement, Ind AS-28-Investments in Associates and Joint Ventures and Ind AS-31-Interests in Joint Ventures, the consolidated audited financial statement forms part of the Annual Report.
The audited financial statement including the consolidated financial statement of the Company and all other documents required to be attached thereto is available on the Company’s website and can be accessed at https://www.iiofinancialservices.com. The financial statements of the subsidiaries, as required, are available on the Company’s website and can be accessed at https://www.iiofinancialservices.com.
The Board of Directors of the Company state that:
a) in the preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards read with requirements set out under Schedule III to the Companies Act, 2013 ("the Act”) have been followed and there were no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistently and made judgements 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 profit of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a ‘going concern’ basis;
e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
f) the Directors have 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 by the Company during the financial year with related parties were in its ordinary course of business and on an arm’s length basis.
The Policy on dealing with related party transactions as approved by the Board, can be accessed on the Company’s website at https://www.j iofinancialservices.com
There were no materially significant related party transactions which could have potential conflict with the interests of the Company at large.
Members may also refer Note 23 to the financial statement which sets out related party disclosures pursuant to Indian Accounting Standards.
The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy ("CSR Policy”) indicating the activities to be undertaken by the Company, which has been approved by the Board.
In terms of the CSR Policy, the focus areas of engagement shall be rural transformation, affordable healthcare solutions, access to quality education, environmental sustainability and protection of national heritage.
During the year under review, the Company had spent an amount of Rs. 3,41,27,000/-(2% of the average net profits of the Company for last three financial years) on CSR activities.
The Annual Report on CSR activities undertaken during the year under review, is annexed herewith and marked as “Annexure 1” to this Report.
The CSR policy of the Company can be accessed on the Company’s website at https://www.iiofinancialservices.com
Risk Management
The Board has constituted a Risk Management Committee (‘RMC’) as stipulated in the Master Directions. RMC has been entrusted inter alia with the responsibility to assist the Board in (a) managing market risk, liquidity risk etc. (b) providing advice to the Board for risk mitigation and compliance activities and (c) Annual Review of Risk Management.
The Company has in place Liquidity Risk Management Framework which enables the company to manage liquidity risk. There is an adequate risk management structure in place capable of addressing market, operational, financial, regulatory and other risks that the business is exposed to and the rMc is equipped to devise risk mitigation strategies for the Company from time to time.
Internal Financial Controls
The Company has adequate internal financial controls commensurate with the size of the business and nature of its operations, designed to provide reasonable assurance with regard to the accuracy and completeness of the accounting records and timely preparation and provision of reliable financial statements.
Directors and Key Managerial Personnel
In accordance with the provisions of the Act and the Articles of Association of the Company, Ms. Jayashri Rajesh (DIN: 07559698), Director of the Company, retires by rotation at the ensuing Annual General Meeting. The Board of Directors, on the recommendation of Nomination and Remuneration Committee (“NRC”), has recommended her re-appointment.
During the year under review, the Members of the Company on recommendation of Board and NRC have appointed Shri Kundapur Vaman Kamath (DIN: 00043501) as an Independent Director to hold the office for a term of 5 (five) consecutive years up to November 13, 2027. In the opinion of the Board, he possesses requisite expertise, integrity and experience (including the proficiency).
Shri Dhiren Vrajlal Dalal (DIN: 01218886) ceased to be an Independent Director of the Company upon completion of his tenure effective March 30, 2023.
The Board places on record its appreciation for the valuable contribution made by Shri Dhiren Vrajlal Dalal, for governance of the Company during his tenure as an Independent Director of the Company.
Shri Suresh Jagannathan had resigned as Chief Financial Officer of the Company effective November 26, 2022. The Board on recommendation of NRC had appointed Shri Abhishek Haridas Pathak as the Chief Financial Officer (“KMP”) of the Company with effect from February 24, 2023.
Ms. Ashoo Mote had demitted the office as Company Secretary of the Company with effect from March 21, 2023. The Board on recommendation of NRC had appointed Ms. V. Mohana as the Company Secretary (“KMP”) of the Company with effect from March 21,2023.
During the year under review, the Company has received declarations from all the Independent Directors of the Company, confirming that:
• they meet with the criteria of independence as prescribed under the Act; and
• they have registered their names in the Independent Directors’ Databank
The Company has devised the following policies:
> Policy for selection of Directors and determining Directors’ Independence; and
> Remuneration Policy for Directors, Key Managerial Personnel, Senior Management and other Employees.
The aforesaid policies are available on Company’s website and can be accessed on the Company’s website at https://www.iiofinancialservices.com
The Policy for selection of Directors and determining Directors’ independence sets out the guiding principles for the Nomination and Remuneration Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, while considering their appointment as independent directors of the Company. The Policy also provides for the factors in evaluating the suitability of individual board members with diverse background and experience that are relevant for the Company’s operations. There has been no change in the policy during the current year.
The Company’s remuneration policy is directed towards rewarding performance based on review of achievements. The remuneration policy is in consonance with existing industry practice. There has been no change in the policy during the current year.
Auditors and Auditors’ Reporta) Statutory Auditors
CKSP and CO LLP, Chartered Accountants (Firm Registration Number -131228W/W100044) was appointed as Statutory Auditors of the Company for a term of 3 (three) continuous years, at the Annual General Meeting (AGM) held on September 27, 2021 in accordance with the Guidelines for Appointment of Statutory Auditors (SAs) of NBFCs Circular’) issued b .
They have confirmed their eligibility and qualifications required under the Act and the RBI Circular for holding office as Statutory Auditors of the Company.
The Auditors’ Report for the Financial Year 2023 does not contain any qualification, reservation, adverse remark or disclaimer. The Notes on financial statement referred
-explanatory and do not call for any further comments.
Upon consummation of the Scheme, the asset size of the Company would be more
In
this regard, the Board has recommended the appointment of M/s Lodha & Co, Chartered Accountants, (FRN - 301051E) as Joint Statutory Auditor of the Company, to ensure that Statutory Audit of the Company is conducted by Joint Auditors, in compliance with the RBI Circular.
b) Secretarial Auditor
The Board of Directors of the Company had appointed M/s. Shashikala Rao & Co., Company Secretaries, to conduct Secretarial Audit for the financial year 2022-23 on voluntary basis. The Secretarial Audit Report for the financial year ended March 31, 2023 is annexed herewith and marked as Annexure 2. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.
Disclosures:I. Meetings of the Board
10 (Ten) meetings of the Board of Directors of the Company were held during the financial year 2022-23.
II. Committees of the Board (a) Audit Committee
During the year under review, Shri Dhiren Vrajlal Dalal ceased to be an Independent Director of the Company upon completion of his tenure and consequently ceased to
be the member of the Audit Committee. The Audit Committee has been reconstituted by the Board of Directors of the Company on April 12, 2023 and the Audit Committee comprises of Shri Jagannatha Kumar (DIN: 07549304) (Chairman), Shri K. Sethuraman (DIN: 00007787), Ms. Jayashri Rajesh (DIN 07559698) and Shri B. Chandrasekaran (DIN: 06670563) as members. All the recommendations made by the Audit Committee during the year under review were accepted by the Board.
(b) Corporate Social Responsibility Committee
During the year under review, Shri Dhiren Vrajlal Dalal completed his term as an Independent Director of the Company and consequently ceased to be the member of the Corporate Social Responsibility Committee. The Corporate Social Responsibility Committee of the Board of Directors of the Company comprises of Shri K. Sethuraman (DIN: 00007787) (Chairman), Shri Jagannatha Kumar (DIN: 07549304) and Shri B. Chandrasekaran (DiN: 06670563) as members.
Vigil Mechanism and Whistle-blower Policy
The Company promotes safe, ethical and compliant conduct of all its business activities and has put in place a mechanism for reporting illegal or unethical behaviour. The Company has a Vigil Mechanism and Whistle-blower policy under which the employees are encouraged to report violations of applicable laws and regulations and the Code of Conduct - without fear of any retaliation. The reportable matters may be disclosed to the Ethics & Compliance Task Force which operates under the supervision of the Audit Committee. Employees may also report violations to the Chairman of the Audit Committee and there was no instance of denial of access to the Audit Committee.
The policy is available on Company’s website and can be accessed at https://www.iiofinancialservices.com
Particulars of loans given, investments made, guarantees given or securities provided
The Company, being a Non-Banking Financial Company registered under Chapter IIIB of the Reserve Bank of India Act, 1934 is exempted from the provisions of Section 186 of the Act relating to loan given, investment made, guarantee given, and security provided.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and OutgoA. Conservation of Energy
(i) Steps taken for conservation of energy:
During the year under review, the Company was not engaged in any manufacturing or processing activity. Considering the nature of Company’s business, there is no reporting to be made on conservation of energy in its operations.
Notwithstanding this, the Company recognises the importance of energy conservation in decreasing the adverse effects of global warming and climate change. The Company carries on its activities in an environmentally friendly and energy efficient manner.
(ii) Steps taken by the Company for utilising alternate sources of energy:
Nil
(iii) The capital investment on energy conservation equipment:
Nil
B. Technology Absorption(i) Major efforts made towards technology absorption:
The Company has not entered into any technology agreement or collaborations.
(ii) The benefits derived like product improvement, cost reduction, product development or import substitution:
None
(iii) Information regarding imported technology (Imported during last three years):
The Company has not imported any technology during the last three years.
(iv) Expenditure incurred on research and development:
Nil
C. Foreign Exchange Earnings and Outgo
There was no foreign exchange earnings and outgo during the year.
Annual Return
The Annual Return of the Company as on March 31,2023 is available on the website of the Company and can be accessed at https://www.iiofinancialservices.com
Secretarial Standards
The Company has followed the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions or applicability of these items during the year under review:
i. Details relating to deposits covered under Chapter V of the Act.
ii. Issue of equity shares with differential rights as to dividend, voting or otherwise.
iii. Issue of shares (including sweat equity shares and ESOS) to employees of the Company under any scheme.
iv. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.
v. No fraud was reported by the Auditors to the Audit Committee or the Board of Directors of the Company.
vi. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.
vii. The Company is not required to maintain cost records in terms of Section 148(1) of the Act.
viii. Details in terms of Section 197(12) of the Act.
ix. There is no application made / proceeding pending under the Insolvency and Bankruptcy Code, 2016.
x. There was no instance of one-time settlement with any Bank or Financial Institution.
Disclosure pertaining to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH Act’) and Rules made thereunder and there were no cases/ complaints filed during the year under POSH Act.
Acknowledgement
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the banks, government authorities, customers, vendors and members during the year under review.
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