Reliance Infrastructure Ltd Directors Report.

Dear Shareowners,

Your Directors present the 92nd Annual Report and the audited financial statements for the financial year ended March 31, 2021.

Financial performance and state of the Company’s affairs

The financial performance of the Company for the financial year ended March 31, 2021 is summarised below:

(Rs. in crore)

Particulars

Financial year ended March 31, 2021

*Financial year ended March 31, 2020

Standalone Consolidated Standalone Consolidated
Total Income 2,522 17,665 3,339 20,977
Gross Profit before depreciation (406) 914 1,061 2,330
Depreciation and Amortisation 59 1,352 65 1,389
Exceptional Items-(Expenses)/Income 354 126 - (126)
Profit/(Loss) before taxation (111) (311) 996 815
Tax expenses (Net) (including deferred tax and tax for earlier years) (92) (167) (35) (51)
Net profit from discontinuing operation - - - -
Profit/(Loss) after taxation (19) (532) 1,031 771
Balance of profit brought forward from previous year 303 (4,347) (675) (5,072)
Other comprehensive income recognised directly in retained earnings - 3 3 16
Profit available for appropriations 284 - 359 -
Dividend paid out on equity shares during the year (including tax on dividend) (Net) - - - 5
Transfer to Debenture Redemption Reserve - - 56 56
Balance carried to Balance Sheet 284 (4,878) 303 (4,347)

*Figures of previous year have been regrouped and reclassified wherever required.

Financial Performance

During the year under review, your Company earned an income of Rs. 2,522 crore against Rs. 3,339 crore in the previous year. The Company incurred loss of Rs. 19 crore for the year as compared to profit of Rs. 1,031 crore in the previous year.

The performance and financial position of the subsidiary companies, associate companies and joint ventures are included in the consolidated financial statement of the Company.

COVID 19 has impacted businesses across the globe and India causing significant disturbance and slowdown of economic activities. The Company’s operations during the year were impacted due to COVID 19 and it has considered all possible impact of COVID 19 in preparation of the financial statements, including assessment of the recoverability of financial and non financial assets based on the various internal and external information and assumptions relating to economic forecasts up to the date of approval of these financial results. The aforesaid assessment is based on projections and estimations which are dependent on future development including government policies. Any changes due to the changes in situations / circumstances will be taken into consideration, if necessary, as and when it crystallizes.

Dividend

During the year under review, the Board of Directors has not recommended dividend on the equity shares of the Company. The dividend distribution policy of the Company is uploaded on the Company’s website at the link https://www.rinfra.

com/documents/1142822/10625710/RInfra_Dividend_ Distribution_Policy.pdf.

Business Operations

The Company is amongst the leading player in the country in the Engineering and Construction (E&C) segment for power, roads, metro and other infrastructure sectors. The Company is also engaged in implementation, operation and maintenance of several projects in defence sector and infrastructural areas through its special purpose vehicles.

Management Discussion and Analysis

The Management Discussion and Analysis, for the year under review, as stipulated under Regulation 34(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), is presented in a separate section forming part of this Annual Report.

Resources and Liquidity

The Company is engaged in various initiatives to monetize its assets and to unlock the value of its businesses and to thereby significantly reduce its overall leverage.

During the year, the Company has completed the sale of the following assets:

i. DA Toll Road Private Limited

The Company signed a binding Share Purchase Agreement (SPA) with Cube Highways and Infrastructure III Pte Ltd (Cube) for 100% equity stake sale of DA Toll Road Private Limited (DATR) on March 14, 2019, for an Enterprise Value of ~Rs. 3,600 crore including equity or equity linked instruments or debt of up to Rs. 1700 crore.

As per the SPA, the Company successfully completed the sale of its 100% equity stake in DATR to Cube for a total transaction enterprise value of ~Rs. 3,600 crore. The proceeds from the transaction were utilized entirely for debt reduction of the Company.

ii. Parbati Koldam Transmission Company Limited

The Company entered into the agreement for sale of its entire 74% equity shares held in Parbati Koldam Transmission Company Limited (PKTCL) to India Grid Trust on November 28, 2020. The transaction was completed on January 8, 2021 for a total transaction enterprise value of ~Rs. 900 crore. The proceeds from the transaction were utilized entirely for debt reduction of the Company.

iii. Commercial Property

During the year, the Company successfully completed the sale of its commercial property to YES Bank Limited (YBL) for a transaction value of Rs. 1200 crore. For this purpose, the Company and YBL had entered into a Composite Transaction for Sale, Buyback, and Lease in respect of the property whereby the Company would have the option to buy back the property at the end of 8 years and 6 months and upon buyback, the Company will simultaneously lease it to YBL for a period of 9 years. Entire proceeds from this sale were utilized to repay the debt of YES Bank.

Deposits

The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 (‘the Act’) and the Companies (Acceptance of Deposits) Rules, 2014. There are no unclaimed deposits, unclaimed/ unpaid interest, refunds due to the deposit holders or to be deposited with the Investor Education and Protection Fund as on March 31, 2021.

Particulars of Loans, Guarantees or Investments

The Company has complied with provisions of Section 186 of the Act, to the extent applicable with respect to Loans, Guarantees or Investments during the year.

Pursuant to Section 186 of the Act, details of the Investments made by the Company are provided in the standalone financial statement (Please refer to Note No. 7 to the standalone financial statement).

Subsidiary Companies, Associates and Joint venture

During the year under review, DA Toll Road Private Limited and Parbati Koldam Transmission Company Limited ceased to be subsidiaries of the Company.

Further, Reliance Naval and Engineering Limited ceased to be an associate of the Company.

The summary of the performance and financial position of each of the subsidiaries, associate companies and joint venture companies is presented in Form AOC – 1. Also, a report on the performance and financial position of each of the subsidiaries, associates and joint ventures as per the Act is provided in the consolidated financial statement.

The Policy for determining material subsidiary company, as approvedbytheBoard,maybeaccessedontheCompany’swebsite at https://www.rinfra.com/documents/1142822/1189698/ Policy_for_Determination_of_Material_Subsidiary_updated.pdf.

Standalone and Consolidated Financial Statements

The audited financial statements of the Company are drawn up, both on standalone and consolidated basis, for the financial year ended March 31, 2021, in accordance with the requirements of the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) notified under Section 133 of the Act, read with relevant Rules and other accounting principles. The Consolidated Financial Statement has been prepared based on the financial statements received from subsidiaries, associates and joint ventures, as approved by their respective Board of Directors.

Directors

In terms of the provisions of the Act, Shri Punit Garg, Executive Director of the Company retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the Act and the Listing Regulations. The details of programme for familiarisation of Independent Directors with the Company, nature of the industry in which the Company operates and related matters are uploaded on the website of the Company at the link https://www. rinfra.com/documents/1142822/1189698/Familiarisation_ programme.pdf. Based on the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors and the legal opinion obtained by the Company, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164(2) of the Act. In the opinion of the Board, the Independent Directors possess the requisite expertise and experience and are the persons of high integrity and repute. They fulfill the conditions specified in the Act and the Rules made thereunder and are independent of the management.

Key Managerial Personnel

Shri Pinkesh R Shah has been appointed as Chief Financial Officer of the Company in the place of previous incumbent Shri Sridhar Narasimhan with effect from May 8, 2020.

Evaluation of Directors, Board and Committees

The Nomination and Remuneration Committee of the Board of the Company has devised a policy for performance evaluation of the Directors, Board and its Committees, which includes criteria for performance evaluation. Pursuant to the provisions of the Act and Regulation 17(10) of the Listing Regulations, the Board has carried out an annual evaluation of its own performance, the performance of the Directors individually as well as the evaluation of the working of the committees of the Board. The Board performance was evaluated based on inputs received from all the Directors after considering the criteria such as Board Composition and structure, effectiveness of Board / Committee processes and information provided to the Board, etc. Pursuant to the Listing Regulations, performance evaluation of Independent Directors was done by the entire board, excluding the Independent Director being evaluated.

A separate meeting of the Independent Directors was also held for the evaluation of the performance of Non-Independent Directors, performance of the Board as a whole and that of the Chairman of the Board.

Policy on appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Employees

The Nomination and Remuneration Committee of the Board has devised a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Employees. The Committee 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.rinfra.com/documents/1142822/10641881/ Remuneration-Policy.pdf.

Directors’ Responsibility Statement

Pursuant to the requirements under Section 134(5) of the Act with respect to Directors’ Responsibility Statement, it is hereby confirmed that: i. In the preparation of the annual financial statement for the financial year ended March 31, 2021, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; ii. The Directors had 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, 2021 and of the loss of the Company for the year ended on that date; iii. The Directors had 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; iv. The Directors had prepared the annual financial statement for the financial year ended March 31, 2021, on a going concern basis; v. The Directors had laid down proper internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and vi. The Directors 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 and transactions entered into by the Company during the financial year under review 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 made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which could have potential conflict with the interest of 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 (transactions where the value involved exceeds 10% of the Company’s consolidated gross income or 10% of the Company’s consolidated net worth, whichever is higher), 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. All Related Party Transactions were placed before the Audit Committee for approval. Omnibus approval of the Audit Committee was obtained for the transactions which were of a repetitive nature. The transactions entered into pursuant to the omnibus approval so granted were reviewed and statements giving details of all related party transactions were placed before the Audit Committee on a quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website at the link: https://www.rinfra.com/ documents/1142822/1189698/Related_Party_Transactions_ Policy_updated.pdf. Your Directors draw attention of the Members to note 34 of the standalone financial statement which sets out related party disclosures pursuant to Ind-AS and Schedule V of Listing Regulations.

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

A calendar of Meetings is prepared and circulated in advance to the Directors. During the financial year ended March 31, 2021, eight Board Meetings were held. Details of the meetings held and attended by each Director are given in the Corporate Governance Report forming part of this Annual Report.

Audit Committee

The Audit Committee of the Board of Directors comprises of majority of Independent Directors. The members of the committee are Ms. Manjari Kacker, Shri S S Kohli, Shri K Ravikumar, Ms. Ryna Karani, Independent Directors and Shri Punit Garg, Executive Director and Chief Executive Officer. Ms. Manjari Kacker, Independent Director, is the Chairperson of the Committee.

During the year, all the recommendations made by the Audit Committee were accepted by the Board.

Auditors and Auditor’s Report

M/s. Chaturvedi & Shah LLP, Chartered Accountants were appointed as Statutory Auditors of the Company at the 91st Annual General Meeting of the Company held on June 23, 2020, to hold office for a term of 5 consecutive years until the conclusion of 96th Annual General Meeting of the Company. The Company has received confirmation from M/s. Chaturvedi & Shah LLP, Chartered Accountants that they are not disqualified from continuing as Auditors of the Company.

The Auditors in their report to the Members have given a Disclaimer of Opinion for the reasons set out in the para titled Basis of Disclaimer of Opinion. The relevant facts and the factual position have been explained in the Statement of Changes in Equity and Note 40 to the Standalone Financial Statements Notes on Accounts. It has been explained that:

(i) The Reliance Group of companies of which the Company is a part, supported an independent company in which the Company holds less than 2% of equity shares ("EPC Company") to inter alia undertake contracts and assignments for the large number of varied projects in the fields of Power (Thermal, Hydro and Nuclear), Roads, Cement, Telecom, Metro Rail, etc. which were proposed and/or under development by the Reliance Group. To this end along with other companies of the Reliance Group the Company funded EPC Company by way of project advances, subscription to debentures and inter corporate deposits. The total exposure of the Company as on March 31, 2021 is Rs. 6,491.38 crore ( March 31, 2020:

Rs. 8,066.08 crore) net of provision of Rs. 3,972.17 crore (March 31, 2020, Rs. 3,972.17 crore). The Company has also provided corporate guarantees aggregating of Rs.1,775 crore.

The activities of EPC Company have been impacted by the reduced project activities of the companies of the Reliance Group. While the Company is evaluating the nature of relationship, if any, with the independent EPC Company, based on the analysis carried out in earlier years, the EPC Company has not been treated as related party.

Given the huge opportunity in the EPC field particularly considering the Government of India’s thrust on infrastructure sector coupled with increasing project and EPC activities of the Reliance Group, the EPC Company with its experience will be able to achieve substantial project activities in excess of its current levels, thus enabling the EPC Company to meet its obligations. Based on the available facts, the provision made will be adequate to deal with any contingency relating to recovery from the EPC Company.

The Company has further provided corporate guarantees of Rs. 4,895.87 crore on behalf of certain companies towards their borrowings. As per the reasonable estimate of the management of the Company, it does not expect any obligation against the above guarantee amount.

(ii) During the year ended March 31, 2020 Rs. 3,050.98 Crore being the loss on invocation of pledge of shares of RPower held by the Company has been adjusted against the capital reserve. According to the management of the Company, this is an extremely rare circumstance where even though the value of long term strategic investment is high, the same is being disposed off at much lower value for the reasons beyond the control of the Parent Company, thereby causing the said loss to the Company. Hence, being the capital loss, the same has been adjusted against the capital reserve. Further, due to above said invocation, during the year ended March 31, 2020, investment in RPower has been reduced to 12.77% of its paid-up share capital. Accordingly in terms of Ind AS 28 on Investments in Associates, RPower ceases to be an associate of the Company. Although this being strategic investment and Company continues to be promoter of the RPower, due to the invocations of the shares by the lenders for the reasons beyond the control of the Company the balance investments in RPower have been carried at fair value in accordance with Ind AS 109 on financial instruments and valued at current market price and loss of Rs. 1,973.90 crore being the capital loss, has been adjusted against the capital reserve.

The other observations and comments given by the Auditors in their report, read together with notes on financial statements are self explanatory and hence do not call for any further comments under section 134 of the Act. No fraud has been reported by the Auditors to the Audit Committee or the Board.

Cost Auditors

Pursuant to the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the Board of Directors have appointed M/s. Talati & Associates, Cost Accountants, as the Cost Auditors of the Company for conducting the cost audit of the Engineering & Construction Division and Power Generation Division of the Company for the financial year ending March 31, 2022, and their remuneration is subject to ratification by the Members at the ensuing Annual General Meeting of the Company.

The Provisions of Section 148(1) of the Act are applicable to the Company and accordingly the Company has maintained cost accounts and records in respect of the applicable products for the financial year ended March 31, 2021.

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.

Secretarial Audit and Annual 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 Board of Directors has appointed M/s. Ashita Kaul & Associates, Company Secretaries in Practice, to undertake the Secretarial Audit of the Company. There is no qualification, reservation or adverse remark made by the Secretarial Auditor in the Secretarial Audit Report for the financial year ended March 31, 2021. The Audit Report of the Secretarial Auditors of the Company and its material subsidiaries for the financial year ended March 31, 2021 are attached hereto as Annexure A1 to A3.

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 copy of the same has been submitted with the Stock Exchanges within the prescribed due date.

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.

Annual Return

As required under Section 134 (3)(a) of the Act, the Annual Return for the year 2020-21 is put up on the Company’s website and can be accessed at https://www.rinfra.com/web/rinfra/annual-return.

Particulars of Employees and related disclosures

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.

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, also forms part of this Annual 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. 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 particulars as required to be disclosed in terms of Section 134(3) (m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014 are given in Annexure B forming part of this Report.

Corporate Governance

The Company has adopted the "Reliance Group-Corporate Governance Policies and Code of Conduct" which sets out the systems, processes and policies conforming to the international standards. The report on Corporate Governance as stipulated under Regulation 34(3) read with para C of Schedule V of the Listing Regulations is presented in a separate section forming part of this Annual Report.

A certificate from M/s. Ashita Kaul & Associates, Practising Company Secretary, 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.

Whistle Blower Policy (Vigil Mechanism)

In accordance with Section 177 of the Act and the Listing Regulations, the Company has formulated a Vigil Mechanism to address the genuine concerns, if any, of the Directors and employees. The details of the same have been stated in the Report on Corporate Governance and the policy can also be accessed on the Company’s website at the link: https://www. rinfra.com/documents/1142822/1189698/Whistle_Blower_ Policy_updated.pdf.

Risk Management

The Board of the Company has constituted a Risk Management Committee which consists of majority of Independent Directors and also Senior Managerial Personnel of the Company. The details of the Committee and its terms of reference, etc. are set out in the Corporate Governance Report forming part of this Report.

The Company has a robust Business Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhances Company’s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The framework has different risk models which help in identifying risk trend, exposure and potential impact analysis at a Company level as also separately for business segment. The risks are assessed for each project and mitigation measures are initiated both at the project as well as at the corporate level. 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 the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed to upholding and maintaining the dignity of women 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 under review, no such complaints were received. The Company has also constituted an Internal Compliance Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Corporate Social Responsibility

The Company has constituted Corporate Social Responsibility (CSR) Committee in compliance with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR Committee has formulated a CSR Policy indicating the activities to be undertaken by the Company. The CSR policy may be accessed on the Company’s website at the link: https://www.rinfra.com/ documents/1142822/1189698/Rinfra_CSRPolicy_revised. pdf.

The CSR Committee of the Board comprises of Ms. Ryna Karani as Chairperson, Shri S S Kohli, Shri K Ravikumar and Shri Punit Garg as the Members. The disclosure with respect to CSR activities forming part of this Report is given as Annexure C.

Order, if any, passed by the regulator or courts or tribunals

No orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations.

Internal Financial Controls and their adequacy

The Company has in place adequate internal financial controls with reference to financial statement, across the organization. The same is subject to review periodically by the internal audit cell for its effectiveness. During the financial year, such controls were tested and no reportable material weaknesses in the design or operations were observed.

Business Responsibility Report

Business Responsibility Report for the year under review as stipulated under the Listing Regulations is presented under separate section forming part of this Annual Report.

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 its Directors or Employees, proceedings pending under the Insolvency and Bankruptcy Code, 2016 and one-time settlement with any Bank or Financial Institution.

Acknowledgements

Your Directors would like to express their sincere appreciation for the co-operation and assistance received from shareholders, debenture holders, debenture trustees, bankers, financial institutions, government authorities, regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff.

For and on behalf of the Board of Directors

Anil Dhirubhai Ambani

Chairman

Place: Mumbai

Date : May 28, 2021