Reliance Natural Resources Ltd Directors Report

RELIANCE NATURAL RESOURCES LIMITED ANNUAL REPORT 2009-2010 DIRECTORS REPORT Dear Shareowners, Your Directors have pleasure in presenting the tenth Annual Report together with the audited statement of accounts of the Company for the year ended March 31, 2010. Financial Results The performance of the Company of the financial year ended March 31, 2010 is summarized below: Particulars Financial Year ended Financial Year ended March 31, 2010 March 31, 2009 Rs. in Lakhs US $ in Rs. in Lakhs US $ in million* million* Total Income 46,601.62 103.79 47,141.09 92.94 Profit before depreciation 8,985.64 20.01 7,294.22 14.18 Less: Depreciation 9.33 0.02 5.99 0.01 Profit before Tax 8,976.31 19.99 7,288.23 14.17 Less Provision for- Current tax 1,616.25 3.60 170.06 0.34 Fringe benefit tax - - 11.54 0.02 Deferred tax 28.01 0.07 19.61 0.04 Profit after Tax 7,332.05 16.33 6,987.02 13.77 Profit available for appropriation 16,541.29 36.84 9,554.27 18.84 Appropriations Balance carried to balance sheet 23,873.34 53.17 16,541.29 32.61 * Rs.44.90 = US $ 1 Exchange Rate as on March 31, 2010 (50.72 = US $ 1 Exchange Rate as on March 31, 2009) Financial Performance: During the year under review, your Company recorded a total income of Rs.466.02 crore, against Rs 471.41 crore in the previous year. Net Profit for the financial year ended March 31, 2010 rose to Rs.73.29 crore from Rs.69.87 crore in the previous year, an increase of 4.91 per cent. Dividend Your Directors have not recommended any dividend on equity shares for the year under review. Revised Gas Supply Master Agreement The Honble Supreme Court of India vide order and judgment pronounced on 7th May 2010, held that arrangement for supply of gas under the Scheme and as reflected by MOU shall be suitable for the interests of shareholders of the Company and of Reliance Industries Limited (RIL) and directed that the Gas Supply Master Agreement (GSMA) shall be renegotiated keeping in mind the terms of the PSC, Government policy, EGOM decisions and MOU Accordingly, the Company has signed the revised Gas Supply Master Agreement with RIL in June 2010. Scheme of Arrangement The Scheme of Arrangement for the demerger of the Business Undertaking of the Company into Reliance Power Limited was approved by the Honble High Court of Bombay vide order dated October, 15, 2010. The Scheme has become effective from November 12, 2010 and the appointed date under the Scheme was October 15, 2010. Share Capital After the year end, the Company cancelled and extinguished the entire 1,63,31,30, 422 equity share capital of the Company pursuant to the Scheme of Arrangement (Scheme)sanctioned by the Honble High Court of Bombay vide order dated October, 15, 2010. The Company also allotted 1,00,000 equity shares of Rs 5 each of the Company to Reliance Power Limited during the year pursuant to the Scheme. Consequently, the Company has become the wholly-owned subsidiary of Reliance Power Limited with effect from November 12, 2010. Subsidiary Companies During the year under review, PT Sumukha Coal Services became wholly owned subsidiary of Reliance Natural Resources (Singapore) Pte Ltd, a subsidiary of the Company and consequently, in terms of Section 4(1)(c) of the Companies Act, 1956, it also became subsidiary of the Company. Pursuant to the Scheme, the investments of the Company in its wholly owned subsidiaries, viz., Reliance Fuel Resources Limited, Reliance Natural Resources (Singapore) Pte Ltd. And PT Sumukha Coal Services were transferred to Reliance Power Limited. Consequently, Reliance Fuel Resources Limited, Reliance Natural Resources (Singapore) Pte Ltd. And PT Sumukha Coal Services have become subsidiaries of Reliance Power Limited. During the year, Reliance Cementation Private Limited ceased to be subsidiary of the Company and as a consequence, Reliance Cement Corporation Private Limited, Reliance Cement Works Private Limited, and Reliance Cement and Infra Private Limited, which are wholly owned subsidiary companies subsidiaries of Reliance Cementation Private Limited also ceased to be subsidiaries of the Company. Fixed Deposits The Company has not accepted any fixed deposits during the year. Directors Shri Anil D Ambani, Shri Anil Singhvi, Shri S L Rao, Shri J L Bajaj and Dr Bakul Dholakia resigned as Directors of the Company. The Board recorded with appreciation the contribution made by them during their tenure on the Board. Shri Suresh Nagarajan, Shri Arunachalam Venkatachalam, and Shri Paresh Rathod were appointed as Additional Directors in terms of Section 260 of the Companies Act, 1956. They shall hold office up to the date of the ensuing Annual General Meeting. The Company has received notice in writing from a member proposing the candidatures of Shri Suresh Nagarajan, Shri Arunachalam Venkatachalam, and Shri Paresh Rathod for the office of Director. Directors Responsibility Statement Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed that: (i) in the preparation of the accounts for the financial year ended March 31, 2010, the applicable accounting standards have been followed and that there are no material departures from the same; (ii) the Directors have 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, 2010 and of the profit of the Company for the said period; (iii) the Directors have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) the Directors have prepared the accounts for the financial year ended March 31, 2010 on a going concern basis. The above statements have been noted by the audit committee at its meeting held on May 14, 2010. Consolidated Financial Statements The Audited Consolidated Financial Statements, based on the Financial Statements received from subsidiary companies as approved by their respective Board of Directors, and prepared in accordance with the Accounting Standard - 21 (AS-21) - Consolidated Financial Statements and Accounting Standard - 23 (AS-23) - Accounting for Investments in Associates in Consolidated Financial Statements notified under Section 211 (3C) of the Companies Act, 1956 read with the Companies (Accounting Standards) Rules, 2006, as applicable are provided in the Annual Report. Auditors Pathak H D & Associates, Chartered Accountants, Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting. The Notes to Accounts forming part of the financial statements are self-explanatory and need no further explanation. There are no qualifications or adverse remarks in the Auditors Report which require any clarification or explanation. Pathak H D & Associates, Chartered Accountants have been statutory auditors of the Company for a period of 5 years. In line with the best Governance Practices and as recommended in the Corporate Governance - Voluntary Guidelines, 2009 issued by the Ministry of Corporate Affairs, it is now proposed to rotate the audit firms. Accordingly, it is proposed that T. R. Chadha & Co., Chartered Accountants be appointed as Statutory Auditors of the Company for the financial year 2010-11. The Company has received a letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956, and that they are not disqualified for such appointment within the meaning of Section 226 of the Companies Act, 1956. Particulars of Employees In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure to the Directors Report. However, having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all members of the Company, excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure A included in this report. Acknowledgements Your Directors wish to place on record their appreciation for the continued support and cooperation of the shareholders, bankers, various regulatory and government authorities and employees of the Company. On behalf of the Board of Directors Arunachalam Venkatachalam Paresh Rathod Director Director Mumbai November 12, 2010. Annexure to the Directors Report Information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 as amended and forming part of the Directors Report for the year ended March 31, 2010 1. Conservation of Energy and Technology Absorption Since the Company is not engaged in any manufacturing activity, the particulars are not applicable. However, the Company takes active steps for conservation of energy in the office premises and other facilities owned by the Company. 2. Foreign Exchange Earnings and Outgo (i) Foreign Exchange Earnings Rs. 3.98 crore (previous year Rs. 1.61 crore) (ii) Foreign Exchange Outgo Rs. 272.14 crore (previous year Rs.235.98 crore)