cesc ventures ltd Management discussions

(ANNEXURE ‘A TO THE BOARDS REPORT)

RPSG Ventures Limited (RPSG Ventures, RVL or ‘the Company¹) is part of the RP-Sanjiv Goenka Group (‘RP-SG Group¹ orthe Group¹), a leading business conglomerate in India. Along with its subsidiaries, the Company operates a diversified portfolio of businesses including information technology (IT) services, business process management (BPM), fast moving consumer goods (FMCG) including, ayurvedic formulations, real estate and sports. Other than IT services, which constitute its standalone operations, all other businesses are carried out through various subsidiary companies (See Box 1).

Box 1: RPSG Ventures Limited - Key Businesses and Operating Entities

As a standalone entity, RPSG Ventures core business consists of information technology (IT) services, being provided to certain Group companies operating in the power sector. Its key operating subsidiaries include:

• Firstsource Solutions Limited which, along with its subsidiaries, is a leading provider of customised business process management (BPM) services in the US, the UK, India, Mexico and the Philippines.

• Guiltfree Industries Limited which, along with its step-down subsidiary Apricot Foods Private Limited, operates in the Indian FMCG sector under the brands Too Yumm, Naturali and Evita.

• Herbolab India Private Limited, which markets ayurvedic formulations focusing on health and wellness under the brand Dr Vaidyas.

• Quest Properties India Limited, which operates in the real estate sector. It manages Kolkatas first luxury shopping mall Quest and is developing a residential project in Haldia, West Bengal.

• APA Services Limited, which through its subsidiaries, operates and manages the iconic football club ATK Mohun Bagan.

• RPSG Sports Private Limited and RPSG Sports South Africa PTY Limited own and operate the Lucknow Super Giants franchise of the Indian Premier League and the Durban Super Giants franchise of the South Africa T20 League respectively.

RPSG Ventures also leverages emerging opportunities in India through incubation of new businesses and investments in venture capital funds.

This report presents a review of operational and financial performance of RVLs businesses during the year. It also discusses the strategy and important initiatives taken by the Company and its key subsidiaries to meet their business objectives.

MACROECONOMIC OVERVIEW

After an impressive post-Covid growth in the previous year, global economic performance decelerated in 2022, mainly due to the war in Ukraine which affected global energy and food markets as well as disruptions in global supply chains following Covid-19 outbreaks in China. According to the IMF, world output grew at 3.4% in 2022, down from 6.3% in 2021. The Indian economy performed much better in comparison. According to latest NSO estimates, Indias GDP grew at 7.0% in 2022-23, compared to 9.1% in 2021-22. Not only was the deceleration significantly less pronounced, but India also reflected a robust macroeconomic environment and a stable financial sector in the face of global inflationary headwinds and considerable uncertainty. As shown in Table 1, the improvement in GDP was broad-based with all sectors contributing to the performance, with the exception of manufacturing.

Table 1: GDP Growth in India and Key Sectors

	2021-22	2022-23
Agriculture	3.5%	3.3%
Industry	11.6%	3.6%
Services	8.8%	9.4%
GDP	9.1%	7.0%

Source: National Statistical Office (NSO); Second Advance Estimates

This was also a year where there were no disruptions in economic activity in India due to Covid. Even as one cannot predict the future, it would be safe to say that pandemic- related risks have come down considerably, the more so if one considers the medical advances and better preparedness to deal with such events at all levels - from governments to businesses and organisations to the public at large. And while the world faces risks of continued inflation and instability in the financial sector transforming into a full-blown crisis, the situation in India is much better.

According to the RBIs recent Monetary Policy Report released in April 2023, India is likely to witness only a marginal deceleration in growth from 7.0% in 2022-23 to 6.5% in 202324. This is in stark contrast to the situation in the developed world which is likely to see much sharper fall in growth in 2023. In fact, certain economies such as Germany and the United Kingdom are headed towards a decline in output compared to the previous year.

INFORMATION TECHNOLOGY (IT) SERVICES Service Portfolio and Opportunity

RPSG Ventures currently provides IT consultancy, projects and development, as well as support services to entities engaged in electric power generation and distribution. Its core strength includes deploying best-in-class IT solutions for the sector through a robust mix of capabilities in

existing and emerging technologies which is reflected in its intellectual property of 350+ applications. These capabilities are further enhanced by its strong team with diverse skill sets, covering custom application development, IT Infrastructure & Networking and IT security. Box 2 presents key services provided by the Company.

Box 2: RPSG Ventures Portfolio of IT Services

• Application Development and Management.

• Setup, Operations and Maintenance (O&M) of IT Infrastructure.

• Data Centre and Disaster Recovery set-up and solutions.

• Cyber Security Solutions and Management.

• Smart Building Solutions.

RVLs applications cover the entire range of operations and processes carried out by power utilities in their day-to-day functioning. These include electricity billing, online consumer services, monitoring, MIS reporting as well as management of generation and distribution assets. Besides, there are applications that can be utilised across industries include customer relations (CRM), human resources (HRMS), treasury management system, cyber security, administration, e-services, digital communication solutions, applications in social media, mobility, analytics and cloud computing.

These capabilities provide RPSG Ventures with a unique opportunity to market its services to clients both within and outside the power sector. In 2022-23, such services were provided to various Group entities including CESC Limited (CESC), Haldia Energy Limited (HEL), Dhariwal Infrastructure Limited (DIL) and the Groups distribution franchisees (DFs) in Rajasthan and Maharashtra.

Operational Performance

RVL continued to innovate and help its clients develop a competitive edge by providing quality services, ensuring that its clients had high availability of the core network and that the infrastructure met stringent parameters of reliability, security and scalability. Important initiatives undertaken in key service areas during 2022-23 are presented below:

• Services to Power Generation: RPSG Ventures develops applications for generation plants and offices of CESC, HEL and DIL to digitise, automate and improve business processes. Considerable emphasis has been on cybersecurity including strengthening of IT-OT network security, identification of critical information infrastructure, development of a Cyber Crisis Management Plan (CCMP) and implementation of information security management systems. In 202223, RPSG Ventures also helped in securing ISO 27001 certification for four generation plants of CESC, HEL and DIL. Further details of RVLs initiatives in the area of information security are provided in Box 3.

• Services to Power Distribution: Several predictive and optimisation tools have been developed to

monitor and reduce cost and increase operational efficiency. Initiatives implemented in 2022-23 include: (i) digitisation of Emergency Depot Duty Roster as well as incentive calculation through integration with biometric attendance, leave management and CRM systems (ii) launch of a new and more advanced CESC website. In another key development, implementation of a new smart prepaid meter billing system is in progress.

• Services to Distribution Franchises (DF): Many initiatives were taken to improve efficiencies of these businesses. For instance, in case of Malegaon DF, a number of mobile app-based solutions were implemented to facilitate recovery of outstanding dues, carry out loss control activities and geo-tagging consumer premises. Similarly, in the Rajasthan DFs, the CRM mobile app was completely revamped by incorporating additional features like tracking of allocated dockets by technicians, submission of feedback, integration with Google Map along with latest IT security features.

• Human Resources: Migration of the HRMS of one of the clients CESC, from the existing RISC-based to Intel-based environment in line with CESCs Business Continuity Plan (BCP) is currently in progress. This will also include deployment of the latest versions of relevant software for enhanced features such as remote availability through mobile phones.

Box 3: IT Infrastructure and Security Projects

• The Cyber Crisis Management Plan (CCMP) was earlier approved by CERT-In authority both for Generation and Distribution divisions of CESC and the Critical Information Infrastructure (CII) document were submitted to NCIIPC for approval. In 2022-23, the approval for Distribution was received, whereas the approval for Generation is under process. Security audit of ICT and operation technology (OT) for both generation and distribution division were also completed during the year.

• Security Infrastructure and Processes are continually upgraded to mitigate known vulnerabilities and threats. As mentioned earlier, compliance with ISMS framework and ISO certification was received for CESCs Generation wing, while the process is currently underway for the Distribution function of CESC. Training programmes on Cybersecurity Awareness as well as mock drills and Table Top exercises were conducted. Besides, e-mailers are regularly being sent to all employees.

• During the year, the first phase of the design, planning and implementation of consolidated Disaster Recovery Centre involving Build and NOC services was completed. The second phase involving the compute part is under process of further procurement and implementation.

Human Resources (HR)

RVLs HR strategy is predicated on a preference for inhouse talent and filling vacancies from outside in line with a structured recruitment policy. Fresh talent from premier technical institutes is hired through a summer internship programme with an opportunity for pre-placement offer, whereas lateral recruitment is carried out based on the need to build capability, where required.

Learning and development is a key focus area, given that mastering of new skills, processes and technologies are critical for success in IT. In 2022-23, the Company offered various technical training courses such as cyber security risks and its mitigation, application of IOT in the power sector, application of IT in power distribution business as well as server and active directory administration.

To facilitate continuous learning of its employees on ISMS and Business Continuity, the Company facilitated certification courses on ISO 27001 and ISO 23001 as well as a short-term certificate course on cyber security. RVL also facilitated e-learning on technical, behavioural and management courses in collaboration with Udemy and OneHourLearning. Several in-house training programmes were also organised: leadership and team building, strategic management, developing analytical skill for decision making. Overall, the organisation imparted 701 man-days of training to its employees during the year.

During the year, RVL adhered to its system driven process of annual performance appraisal, which incorporates a structured reward and recognition process to foster a performance-based culture. Apart from its existing reward and recognition schemes — Udaan, ‘Nakshatra and ‘Kudos — a team-based reward and recognition scheme called ‘Sanhati was launched in 2022-23 to recognise team-based accomplishments.

RVL has effective, employee-friendly HR policies and processes that keep employee engagement high and enhance welfare. Communication meetings are regularly organised by the leadership team to percolate client expectations, address queries of employees and generate a free flow of ideas. As on March 31,2023, RPSG Ventures had 96 employees.

Financial Performance

Table 2 summarises the financial performance of RPSG Ventures Limited as a standalone entity.

Table 2: Abridged Financial Performance of RPSG Ventures (Standalone)

Rs. Crore

	FY 2022-23 :FY 2021-22
Revenue from operations	161.5	161.5
Other Income	145.6	135.2
Total Income	307.1	296.7
Employee Benefit Expenses	35.9	27.7
Other Expenses	53.3	56.4
Finance Costs	13.8	5.6

Rs. Crore

	FY 2022-23	FY 2021-22
Depreciation	2.2	1.1
Total Expenses	105.2	90.8
Profit Before Exceptional Items and Taxes	201.9	205.9
Exceptional Items	(70.4)	(8.1)
Profit Before Tax (PBT)	131.5	197.8
Tax Expense	(55.2)	(53.1)
Profit After Tax (PAT)	76.3	144.7
Diluted EPS (?)	25.8	54.1

Operating revenues of RPSG Ventures as a standalone entity stood at Rs. 161.5 Crore in 2022-23. Other income increased in 2022-23 compared to the previous year due to higher interest income. Consequently, total income (including other income) increased from Rs. 296.7 Crore in 2021-22 to Rs. 307.1 Crore in 2022-23.

Total expenses increased from Rs. 90.8 Crore in 2021-22 to Rs. 105.2 Crore in 2022-23, primarily driven by higher employee benefit expenses and finance cost. Exceptional items on account of impairment in the value of investment in subsidiary companies increased from Rs. 8.1 Crore in 2021-22 to Rs. 70.4 Crore in 2022-23.

Accordingly, profit before tax (PBT) was Rs. 131.5 Crore in 2022-23, while profit after tax (PAT) for the year stood at Rs. 76.3 Crore in 2022-23. Diluted earnings per share (EPS) was Rs. 25.8 in 2022-23.

Debtors Turnover Ratio, Current Ratio, Return on Net worth, Debt-Equity Ratio, Interest Coverage Ratio and Net Profit Ratio worked out to 496.92, 0.96, 3.39%, 0.06, 12.09 and 47.21% respectively for the financial year ended March 31, 2023 as against 93.85, 0.66, 7.19%, 0.04, 28.25 and 81.58% respectively for the financial year ended March 31,2022.

Debtors turnover has improved over the previous year on account of better collection from customers. Current Ratio is higher in current year primarily due to advance of short term loans to its subsidiaries for their respective businesses, which does not have any impact on a consolidated basis. Return on Net-worth has decreased mainly due to exceptional loss on account of impairment in investment in subsidiary companies which also does not have any impact on a consolidated basis. Debt-equity Ratio has decreased due to additional debt taken during the year. Interest coverage ratio has decreased due to additional interest payment during the year. Net profit Ratio has decreased due to exceptional loss on account of impairment in investment in subsidiary companies during the current year which also does not have any impact on a consolidated basis. The above key financial ratios are for the Company as a standalone entity and changes in these Ratios are significant as defined under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, i.e., over 25% compared to previous year. Inventory Turnover Ratio is not relevant to the Companys financial performance and has not been reported, as the Company does not carry any inventory.

BUSINESS PROCESS MANAGEMENT (BPM)

RPSG Ventures is present in the BPM industry through its subsidiary Firstsource Solutions Limited (Firstsource or FSL), a publicly listed entity on Indian stock exchanges. RVL holds 53.66% stake in Firstsource.

Firstsource provides transformational business process solutions leveraging its ‘Digital First, Digital Now approach to help simplify complex business processes, elevate customer experience and create value across the chosen industry segments within Banking and Financial Services, Healthcare and Communications, Media and Technology. The tech- based solutions span three major areas:

• Digitally Empowered Contact Centre (DECC)

• Intelligent Back Office

• Platform, Automation and Analytics

Firstsource works with over 150 global clients and leading US based hospital networks - including 18 Fortune 500 companies - by delivering innovative and value-added business process management services through a right mix of the latest technologies, human capabilities and industry expertise. Box 5 provides some details of its client base.

Box 5: FSLs Client Profile

• Banking and Financial Services: Five of the top 10 US

credit card issuers, 2 of the top 5 retails banks in the UK, 6 of the top 15 mortgage servicers in the US, and 5 of top 15 mortgage lenders in the US.

• Healthcare: Seven of the top 10 health insurance / managed care companies in the US; and over 1,000 hospitals in the US.

• Communication, Media and Technology: UKs largest news and broadcasting company, and 2 of the top 5 telecom and broadcasting company in the US.

• Diverse: One of the top 3 utility companies in the UK

FSL has 23,018 employees operating from 39 service facilities spread across the US, the UK, Mexico, India and the Philippines to support its clients. To benefit from opportunities presented by greater adoption of digital technologies across the globe, the Company has developed several applications and tools in areas such as automation, communication, customer intelligence and productivity, where it owns intellectual property.

Over the years, FSL has earned several awards and accolades. In 2022-23, it received multiple recognitions across its service areas from: Avasant RadarView, HFS Horizons, ISG Provider Lens, Everest Group, NelsonHall, Global Sourcing Association (UK) and Mortgage Professional America. It received several awards and recognitions including Bloomberg Gender- Equality Index 2022, European CXA22 Customer Experience Awards, NASSCOM Business Process Innovation Awards 2022, Brandon Hall HCM Excellence Awards 2022, European Contact Centre & Customer Service Awards (ECCCSA) and UK National Contact Centre Awards, 2022. Some other key recognitions beyond its service areas are mentioned below:

• Rated A-100 by Security Scorecard for our robust security posture across technology platforms, cloud

solutions and applications, and our best practices-based security protocols.

• CSR Leadership Award at the 4th Corporate Social Responsibility Summit & Awards 2022. Ranked second in the COVID-19 Warrior category by India CSR Leadership Summit 2022

During the year, FSLs total income (including other income) increased by 3.9% from Rs. 5,922 Crore in 2021-22 to Rs. 6,153 Crore in 2022-23. Expenses grew at 5.0% from Rs. 5,275 Crore in 2021-22 to Rs. 5,538 Crore in 2022-23. PBT for the year was Rs. 615 Crore, whereas PAT stood at Rs. 514 Crore, reflecting a 4.3% de-growth over Rs. 537 crore recorded in 2021-22.

Outlook

Change is a constant when it comes to the BPM industry. And this creates opportunities for those who are agile and responsive to the environment - be it evolving needs of the customers or building capabilities by investing in the right technologies to stay ahead of the curve. With its strong foundations, capabilities and strategic focus, FSL continues to be well placed to benefit from these opportunities by delivering innovative services and adding value to all its stakeholders.

FAST MOVING CONSUMER GOODS (FMCG)

RPSG Ventures has a presence in the FMCG business through its wholly owned subsidiary Guiltfree Industries Limited (GIL). GIL markets packaged snacks under the brand Too Yumm, which are positioned as "Tastier and Healthier" snacks. During the year, it entered the Indian Namkeen category - expanding the coverage of products under the brand. GIL also launched its personal care brand Naturali - with the proposition of being distinctive and relevant for todays consumers.

GIL also has a 70% stake in Rajkot-based Apricot Foods Private Limited (AFPL) which markets snacks under the brand name Evita.

GILs strategic intent has been to establish Too Yumm as a differentiated snacking brand across key segments. To achieve this, the Company has identified four key priorities. Developments in these areas in 2022-23 are mentioned below:

• Innovation: Successful entry into Indian Namkeen with the launch of a strong product portfolio including 11 distinct variants, and a strong and differentiated product proposition in the form of less saturated fat and no palm oil. On western snacks, it introduced flavours with strong regional relevance: pudina flavoured chips for the North and spicy-hot wafers in the South.

• Organisational Capability: Started two new

manufacturing facilities - one each in Uttar Pradesh and Karnataka - taking the total number of plants to nine to support its growing sales of potato chips. The

Namkeen plant in Kanpur was upgraded to deliver five new variants introduced in the second half of 2022-23. The Company also undertook initiatives to enhance the productivity of its existing plants in West Bengal. Investment on R&D, talent and quality continues.

• Distribution: The Company has 23 warehouses enabling its presence in 250+ cities across India. The distribution network expanded significantly in 202223 and now includes over 2800+ distributors and sub distributors catering to more than 4 lakh retail outlets. It also upgraded the sales automation system to drive better efficiencies.

• Brand Equity: Significantly stepped-up digital

engagement. Continued to build strong equity credentials for the brand and relevance amongst young Gen Z audience leveraging associations with sports (IPL), e-sports and music.

GIL currently markets a complete range of skin and haircare products under its personal care brand Naturali - with the proposition of being distinctive and relevant for todays consumers. In a short span of time, Naturali has received considerable acceptance among consumers and is now being successfully distributed across 30,000 stores in the top-30 cities in the country. For growth in this cluttered and competitive category, the Companys strategy is to build the business on the digital-first philosophy. Towards this end, GIL launched its direct-to-consumer (D2C) website in 2022-23. AFPLs focus in 2022-23 was on improving profitability in the face of high commodity prices. The Company carried out a slew of initiatives under the Project "Evita Drill" covering improvements in product realisation and product mix, rationalising low margin sales, optimising recipes, reduction in packaging costs as well as productivity improvement. It introduced new products to strengthen its product portfolio, while also expanding its presence in Rs. 10 pack-size segment. At the same time, it strengthened its distribution network by onboarding 100+ super stockists and distributors.

As a result of its wide-ranging initiatives across its brands and product categories, the Company has reported a significant improvement in performance. The growth in certain categories such as Too Yumm Karare, chips and Namkeens as well as Evita has been particularly encouraging. GILs total consolidated income (including other income) grew by 21.9% from Rs. 349.9 Crore in 2021-22 to Rs. 426.5 Crore in 2022-23.

Outlook

Given the huge untapped potential for the packaged snacks segment in India, GIL believes that the medium to long term fundamentals of the business remains strong. To be sure, there are near-term risks from high commodity prices which can impact profitability as well as consumer demand. But the Company has processes in place for cost-effective procurement as well as effective business continuity measures to meet these exigencies. It is committed to

achieving sustainable growth through effective product differentiation and continuous investments in the right areas including distribution, technology and R&D.

AYURVEDA

RPSG Ventures is present in the Ayurveda industry through its wholly owned subsidiary, Herbolab India Private Limited (Herbolab). Herbolab has a 150-year legacy with over 100 proprietary Ayurveda formulations across multiple categories such as immunity, weight management, respiratory, womens health and mens health - approved by the Ministry of AYUSH. Herbolab is a vertically integrated business with ISO 9001:2015 and GMP certified manufacturing plant. In 202223, its new state-of-the-art manufacturing facility at Silvassa, Dadra and Nagar Haveli, became operational. It also has a R&D centre in Thane, Maharashtra.

Its products are marketed under the brand Dr. Vaidyas, which has emerged as one of Indias largest Ayurveda brands in the direct-to-consumer (D2C) space. Over 90% of its sales comes from online platforms, including the Companys own portal www.drvaidyas.com as well as all major online marketplaces in India such as Amazon, Flipkart, Jio Mart, Snapdeal and 1mg. With an eye to further strengthen its D2C business, Herbolab launched a new website in April 2022 with strong consumer-oriented content and a focus on superior shopping experience. As a result, its online presence and engagement levels have nearly doubled to an average of 9.5 lakh monthly website visits.

Herbolabs focus has been to utilise its decades of research to develop products that match unique needs and come in innovative formats relevant for the new-age consumers. All its formulations are made by doctors using the purest ayurvedic ingredients. During the year, the Company launched 20 new products in the immunity, mens wellness, fitness, and illness categories. This includes special formulations of Chyawanprash in its ‘MyPrash range of products for postnatal care and diabetes along with modern format such as gummies and toffees. It also forayed into weight gain, plant protein and Shilajit in a resin format.

The Company is focused on future growth of the business. Information on augmenting the product portfolio as well as setting-up of a larger manufacturing facility has already been mentioned. It is also putting in place strong quality processes across the entire product development and manufacturing value chain. Besides, it has a solid leadership team with strong experience in Ayurveda, online business operations and digital marketing to drive this growth.

Total income (including other income) grew at 61% from Rs. 18.7 Crore in 2021-22 to Rs. 30.1 Crore in 2022-23. Its success is also underscored by the two awards that it received in 2022-23: (i) Best Ayurvedic Brand at Indian Celebrity Fitness Awards by IHFF, which reflects its commitment to providing high-quality Ayurvedic products, and Best E-commerce Rising Brand by The Brainalytics, which recognises its commitment to expanding its reach through e-commerce channels.

Outlook

The growing trend for natural and herbal products and remedies has helped in increasing the consumption of Ayurveda products in recent years. Post Covid, consumer demand has further accelerated for this category of healthcare solutions that are natural and do not cause side- effects. With the push from Government of India by increasing budget allocation on AYUSH systems and growing consumer acceptability, the outlook of the business remains positive.

REAL ESTATE

Quest Properties India Limited (QPIL), a wholly owned subsidiary of RPSG Ventures Limited, launched Kolkatas first upscale shopping mall, Quest, in November 2013. Over the years, Quest has become an iconic shopping centre brand with pan-India fame, winning several awards and accolades. Some of the awards and recognition received in 2022-23 were:

• "Images Shopping Centre Next Awards 2022" in the category of "Images most Admired Shopping Centre: Marketing & Promotions" by Images Group.

• "Mapic India Shopping Centre Awards 2022" in the category of "Most Admired Shopping Centre of the Year: Metro-East" by Mapic India.

• "15th CII ENCON Award 2022" in the category of "Recognition of Excellence in Energy Conservation - Service Industry" by Confederation of Indian Industry (Eastern Region)

• "15th Realty Plus Excellence Awards 2023 - East" in the category of "Developer of the Year (East)" by Realty Plus

• "14th Estate Awards 2023" in the category of "Shopping Mall of the Year (East)" by Franchise India

With no Covid-related disruptions, 2022-23 saw considerable improvement in performance of the mall. Footfalls improved by 36% compared to previous year. The growth in retail sales performance of the mall was equally impressive. With a 37% growth in sales to Rs. 970 Crore in 2022-23, Quest mall recorded the highest ever sales since its inception. The conversion of footfalls to sales continued to be impressive in 2022-23. During the year, the Company initiated a major exercise to optimise the malls brand mix and store layout considering the malls premium positioning and emerging trends and preferences of customers. Once complete, this will refresh the malls offering and reinforce its position as the preferred shopping destination in the region.

QPIL is also developing a residential project in the port-city of Haldia spread over 3.5 acre of land. The first phase of this project is complete and almost all units have already been sold. QPIL is evaluating the possibility of launching the second phase of the project.

QPIL reported creditable financial results in 2022-23. The Companys total income grew by about 26% from Rs. HI Crore in 2021-22 to Rs. 140 Crore in 2022-23 whereas its profit

before tax (PBT) increased by about 59% from Rs. 32 Crore in 2021-22 to Rs. 51 Crore in FY 2022-23.

Outlook

Consumer confidence remained strong in 2022-23 and is expected to remain positive. Although there are inflationary risks which can impact demand, there is a broad consensus that the macroeconomic environment in India will remain supportive in 2023-24. The risks of significant disruptions due to Covid also remain low, the more so with better preparedness of the entire administrative machinery to deal with such events.

This should open-up further prospects for growth of the business in the short to medium term. The Company is also taking measures to benefit from these opportunities. The proactive move to refresh the brand and store mix of the Quest Mall, even if it might mean a blip in the performance over the next couple of years while the exercise is completed is one such instance.

SPORTS

RPSG Ventures presence in the sports business is through its subsidiary companies - APA Services Private Limited, RPSG Sports Private Limited and RPSG Sports Ventures Private Limited.

APAs subsidiary Kolkata Games and Sports Private Limited holds 80% stake in ATK Mohun Bagan Private Limited, which operates and manages the football club ATK Mohun Bagan. RPSG Ventures holds a 51% stake in RPSG Sports Private Limited (RPSG Sports), which holds the right to own and operate Lucknow Super Giants - the Lucknow franchise of the Indian Premier League (IPL), the countrys preeminent professional mens T20 cricket tournament. The remaining 49% stake in RPSG Sports is held by an unlisted company of the RP-SG Group.

RPSG Ventures also holds a 51% stake in RPSG Sports Ventures Private Limited, which holds 100% stake in RPSG Sports South Africa PTY Limited (RPSG SA). RPSG SA holds the right to own and operate Durban Super Giants - the Durban franchise of the South Africa T20 League (SA T20). The remaining 49% stake in RPSG Sports Ventures is held by an unlisted company of the RP-SG Group.

Cricket

Lucknow Super Giants (LSG) had a successful first season of the IPL, having qualified for the playoffs in 2022. LSG further strengthened its squad with a clear strategy in the subsequent IPL Auction, leading up to a strong well-balanced team. On the non-cricketing front, with the opening-up of the stadiums post Covid, ticketing revenues have started to come in. LSG also successfully tied-up and renewed contracts with its sponsors. These, coupled with significant increase in revenues from central rights due to new broadcast deal finalised by BCCI augurs well for the business.

After a successful bid for the Durban franchise of the SA T20 league in July 2022, Durban Super Giants (DSG) competed in the inaugural edition of the league in 2023. DSG finished the first season at fifth position narrowly missing out on the play-offs.

Football

ATK Mohun Bagan (ATKMB) participates in the Indian Super League (ISL), AFC Cup and various other football competitions. ATKMB were the champions in the 2022-23 season of ISL. This was the 4th title win for the RPSG football franchise in ISL, making it the most successful franchisee in the tournament. ATKMB has also qualified for the prestigious AFC Cup, with matches scheduled from August 2023. It is committed to the development of football in the country, for which it plans to set up an academy and training programmes. The football franchisee will be known as Mohun Bagan Super Giant from the 2023-24 football season.

Outlook

Professional sports franchise is a relatively new business in India with huge untapped potential. Doing away of Covid- related restrictions and having spectators back in the stadiums added to fan engagement and revenues in 2022-23. A supportive macroeconomic environment in the medium to long term will open-up significant opportunities in this space as tournaments across various sports become more popular and garner a sizeable fan following. This is already visible in the case of IPL - Indias largest professional sports league in terms of popularity and viewership - which garnered one of the biggest deals in sports broadcasting with Rs. 48,380 Crore for 5 years, putting it alongside the NFL in the US and the English Premier League in revenue-per-match terms.

CONSOLIDATED FINANCIAL RESULTS

Table 4 summarises the financial performance of RPSG Ventures Limited as a consolidated entity.

Table 4: Abridged Financial Performance of RPSG Ventures (Consolidated)

Rs. Crore

	FY 2022-23	FY 2021-22
Revenue from operations	7,166.2	6,670.1
Other Income	141.8	15.3
Total Income	7,308.0	6,685.4
Operating & Other Expenses	2,346.1	1,719.2
Employee Benefit Expenses	4,017.1	4,063.8
Finance Costs	551.7	211.3
Depreciation	305.3	291.3
Total Expenses	7,220.2	6,285.6
Profit Before Taxes, Share in Net Profit of Associates/JVs	87.8	399.8
Share in Net Profit of Associate and JVs	32.4	108.6
Profit Before Tax (PBT)	120.2	508.5

Rs. Crore

	FY 2022-23	FY 2021-22
Tax Expense	179.2	169.9
Profit After Tax (PAT)	(59.0)	338.6

Total consolidated income (including other income) of RPSG Ventures grew at 9.3% during the year from Rs. 6,685.4 Crore in 2021-22 to Rs. 7308.0 Crore in 2022-23. All key business segments contributed to this improvement in performance during the year.

Total expenses, which includes operating and other expenses, employee costs, depreciation and finance costs, grew at 14.9% from Rs. 6285.6 Crore in 2021-22 to Rs. 7220.2 Crore in FY 2022-23. As a result, profit before tax (PBT) stood at Rs. 120.2 Crore in 2022-23.

ENVIRONMENT SOCIAL GOVERNANCE (ESG)

RPSG Ventures is committed to responsible business practices to promote sustainable and inclusive growth of the ecosystem in which it operates and has embraced , in line with the vision of RP Sanjiv Goenka Group, ESG principles, incorporating them into its operations both as a risk mitigation tool and for long-term value creation.

A detailed and structured presentation of the Companys ESG initiatives in 2022-23 can be found in the Report on Corporate Governance (Annexure ‘B), Additional Shareholder Information (Annexure ‘C), Report on Corporate Social Responsibility Activities (Annexure ‘D) and Business Responsibility and Sustainability Report (Annexure ‘E), which form a part of this Annual Report.

INTERNAL CONTROLS

RPSG Ventures internal control systems are commensurate with the size and nature of its operations. Policies, procedures and authorisation guidelines in this respect are well documented to ensure that all transactions are properly authorised, recorded and reported, and all applicable laws and regulations are complied with.

The effectiveness of internal control mechanism is tested and certified by a process of Internal Audit. Major audit observations and follow-up actions placed before the Audit Committee which reviewes and monitors the same, where necessary. Internal Audit also assesses the effectiveness of risk management and governance process.

RISKS AND CONCERNS

RVLs risk management framework consists of identification of risks, assessment of their nature, severity and potential impact, and measures to mitigate them. Risk Management function is spearheaded by the Risk Management Committee of the Company, details of which are contained in the Report on Corporate Governance (Annexure ‘B) forming part of this Annual Report. The Company has identified the following key areas of risks and concerns.

Macroeconomic Risks

Macroeconomic risks for India at this moment mostly emanate from the global situation: the war in Ukraine, persistent global inflation, poor external sector demand and a fragile financial sector with contagion risks. Although there were no Covid-related events in 2022-23, one can never rule out severe outbreaks in the future. As the Companys services are primarily aimed at the power sector, its fortunes are closely tied with the health of the sector. Therefore, any deterioration in the outlook for the power sector can affect the Company through rationalisation of IT projects and spends. The Company recognises these risks. Indian economy showed tremendous resilience in 2022-23 and the macroeconomic outlook for 2023-24 remains positive. Although Covid-related disruptions are not expected, RVL has an emergency preparedness plan and SOPs to deal with such an eventuality. RVL also believes that the demand for electricity, being an essential service, will continue to be relatively insulated, thereby limiting its impact on the Companys performance. As far as the other macroeconomic risks are concerned, it believes that the potential impact of this class of risks is contained given the size of its operations, reasonable debt exposure at standalone level and no direct exposure to foreign currency movements.

Operational Risks

Key operational risks include reliance on a limited number of clients and sectors, keeping up with technology and related advancements to stay competitive, need to attract and retain talent and ensure adequate employee utilisation to maintain profitability and monitoring customer satisfaction. This also include risks arising out of possible failure to comply with laws and regulations or possible failure to successfully meet our contractual obligations including IT security and related

services, leading to fines, penalties and lengthy litigations. The Company addresses these risks through a well- structured framework which assigns ownership to monitor and mitigate the risks. It strives to expand its client-base beyond the Group as well as the power sector in the future. It believes its HR policies and processes effectively mitigate some of the employee related risks.

Regulatory Risks

The Company is subject to data privacy laws and related rules and regulations that could have material adverse effect on the business. It is also subject to labour laws and regulations governing its relationships with employees and contractors. RVL is conscious of these risks and believes that its governance policies and procedures ensure transparency in operations, timely disclosures and adherence to regulatory compliances.

Cautionary Statement

The financial statements appearing above are in conformity with accounting principles generally accepted in India. The statements in the report which may be considered ‘forward looking statements within the meaning of applicable laws and regulations, have been based upon current expectations and projection about future events. The management cannot, however, guarantee that these forward looking statements will be realised or achieved.

For and on behalf of the Board

Place : Kolkata	Dr. Sanjiv Goenka Chairman
Date : May 19, 2023	DIN:00074796