Religare Enterprises Ltd Directors Report.

To,

The Members,

Religare Enterprises Limited

Your Directors have pleasure in presenting this 37th Annual Report on the business and operations of the Company together with Audited Financial Statements for the financial year ended March 31,2021.

STATE OF AFFAIRS OF THE COMPANY

As indicated and committed in the last years report, your Company is on the path of recovery and revival to bring back the Group to its past glory having laid a strong foundation for the era of growth and profitability as visible in attracting investments from investors in the Company and subsidiaries, appreciating valuation of businesses under subsidiaries and confidence and support of the regulators, shareholders and employees.

There have been significant milestones achieved in the Financial Year 2020-21 and thereafter till date of finalization of this report which have positioned the Company as well as the Group into a new respectful identity which was tarnished due to the past financial irregularities committed against the Company and Religare Finvest Limited ("RFL"), a material subsidiary of the Company, by the erstwhile promoters and ex-management. The new Board and Management is leaving no stone unturned to reinvent the Religare Group by strategically reviving and growing different businesses of your Company.

The key achievements and developments during the last one year have been the receipt of approval of Re-classification of Promoters and Promoters group into the Public shareholders category from the stock exchanges, raising of funds to the tune of Rs. 570 cr. from the primary capital issuance through preferential allotment in the Company, raising of funds to the tune of Rs. 567 cr. in the health insurance subsidiary company Care Health Insurance Limited which include Rs. 200 cr. coming into the Company from the secondary sale of part of its stake to the new investors, lenders consent to consider the Debt Restructuring of RFL with REL continuing as the shareholder of RFL the details of which are elsewhere explained in the Report, settlement of some past disputes and legacy issues which were impending the growth and revival strategy, simplification of the group structure by filing a merger scheme and removal of past audit qualifications etc.. The Company and RFL are also actively pursuing all regulatory and legal actions, both civil and criminal, to ensure recovery of funds siphoned from Religare group.

With the fresh capital raise, the Company intends to repay its outstanding dues to RFL, meet working capital needs of its other operating subsidiaries and to utlise the funds for other general corporate purposes so that the revival, value protection and enhancement at subsidiaries can be achieved which will ultimately strengthen the Company.

With all these significant steps in place and continued support from investors and other stakeholders, we expect the Company and the Group to emerge as shinier and stronger.

COVID-19 IMPACT

The COVID-19 pandemic has been significantly impacting the economic activities and business operations of the companies across the Country on account of lockdown conditions that started and prevailed for most of the financial year. The Company, being a Core Investment Company (CIC), has invested its funds primarily in money market instruments and inter corporate loan to its subsidiaries. Hence, temporary market shocks (such as those due to pandemics/epidemics like COVID-19) are not considered to have a material impact on the business of the Company perse.

The COVID-19 pandemic has however impacted the Group’s business operations in respect of its health insurance subsidiary (Care Health Insurance Limited (CHIL)) and subsidiaries engaged in the business of lending (i.e. RFL, together with its subsidiary, Religare Housing Development Finance Corporation Limited (RHDFCL)).

Considering the fact that COVID-19 can substantially impact the claim level in future, and the ‘Reserve for unexpired risk’ held in normal course may not be adequate to meet the increased level of claims, CHIL has created provision as at March 31,2021 of Rs 13,587.83 Lakh (March 31,2020: Rs 2,445.62 Lakh) towards premium deficiency, based on the review conducted and as advised by its Appointed Actuary, which is also in terms of its accounting policy on Premium Deficiency Reserve.

Apart from other adverse effects, the pandemic has put constraints on recovery of overdues from customers of RFL and RHDFCL. During the year, both RFL and RHDFCL have ensured compliance with various measures announced by various authorities from time to time such as extension of moratorium granted to borrowers, benefit of asset classification, Resolution Framework for COVID-19-related stress, grant of ex-gratia payment of difference between compound interest and simple interest, etc. RFL is required to refund / adjust an estimated sum of Rs. 876.05 Lakh (out of which RFL’s share is Rs. 838.50 Lakh) to the eligible borrowers for refund of interest on interest/compound interest/penal interest, which will be refunded / adjusted in instalments due from respective borrowers in FY2021-22. Similarly, RHDFCL has computed an amount of Rs 66.93 Lakh to be refunded / adjusted in accounts of the borrowers.

The Group believes that the factors considered are reasonable under the current circumstances. The Group has used early indicators of moratorium and delayed payment metrics observed alongwith an estimation of potential stress on probability of default and exposure at default due to COVID-19 situation in developing the estimates and assumptions to assess the expected credit losses on loans. Given the dynamic nature of the pandemic situation, these estimates are subject to uncertainty and may be affected by the severity and duration of the pandemic. In the event of the impacts being more severe or prolonged than anticipated, this will have a corresponding impact on the carrying value of financial assets, the financial position and performance of the Group.

FINANCIAL RESULTS AND BUSINESS OPERATIONS

The highlights of standalone and consolidated financial performance of the Company for the financial years 2020-21 and 2019-20 are as under:

(Rupees in Lakhs)

Particulars

For the financial year 2020-2021

For the financial year 2019-2020

Standalone (Audited) Consolidated (Audited) Standalone (Audited) Consolidated (Audited)
Total Income 11,878.19 253,046.94 6,058.94 239,747.85
Total Expenditure 5,443.26 302,784.64 20,075.27 325,746.28
Profit before Tax 6,434.93 (49,737.70) (14,016.33) (85,998.43)
Exceptional Items - - (17,000.00) (17,000.00)
Profit / (Loss) before Tax after exceptional items 6,434.93 (49,737.70) (31,016.33) (102,998.43)
Share in Profit / (Loss) of Joint Ventures - (8.41) - (13.14)
Profit / (Loss) Before Tax 6,434.93 (49,746.11) (31,016.33) (103,011.57)
Income tax Expense/ (Credit) 35.23 (1,964.36) - 785.99
Profit / (loss) After Tax 6,399.70 (47,781.75) (31,016.33) (103,797.56)
Other Comprehensive Income 41.69 2,868.86 (51.50) 1383.75
Total Comprehensive Income for the period 6,441.39 (44,912.89) (31,067.83) (102,413.81)
Less: Share of Non- Controlling Interest - 3,776.17 - (10,357.44)
Total Comprehensive Income/ (Loss) (after tax and non-controlling interest) 6,441.39 (48,689.06) (31,067.83) (92,056.37)

(i) Consolidated Performance

We recorded a Loss After Exceptional Items and Before Tax of Rs 49,737.70 Lakhs, for Financial Year 2020-21 as compared to Loss After Exceptional Items and Before Tax of Rs. 102,998.43 Lakhs, for Financial Year 2019-20. Loss After Tax and Share in profit/loss of Joint Venture was Rs 47,781.75 Lakhs for Financial Year 2020-21 as compared to Loss After Tax and Share in profit/loss of Joint Venture of Rs. 103,797.56 Lakhs for Financial Year 2019-20. Total Comprehensive Income / (Loss) attributable to the Owner of the Company for the Financial Year 2020-21 is Rs (48,689.06) Lakhs as compared to Rs. (92,056.37) Lakhs in Financial Year 2019-20. Basic earnings per share increased to Rs. (19.65) in Financial Year 202021 from Rs. (39.55) in Financial Year 2019-20.

(ii) Standalone Performance

We recorded a Profit After Exceptional Items and Before Tax of Rs. 6,434.93 Lakhs, for Financial Year 2020-21 as compared to Loss After Exceptional Items and Before Tax of Rs. 31,016.33 Lakhs, for Financial Year 2019-20. Profit After Tax was Rs. 6,399.70 Lakhs for Financial Year 2020-21 as compared to Loss After Tax of Rs. 31,016.33 Lakhs for Financial Year 2019-20. Total Comprehensive Income / (Loss) for the Financial Year 2020-21 is Rs. 6,441.39 Lakhs as compared to Rs. (31,067.83) Lakhs in Financial Year 2019-20. Basic earnings per share increased to Rs. 2.47 in Financial Year 2020-21 from Rs. (13.16) in Financial Year 2019-20.

(iii) Operating Performance of Businesses

In the Lending business, our subsidiary Religare Finvest Limited ("RFL"), which is focused primarily on lending to the SME segment, had total book size of Rs. 487,274 Lakhs out of which SME book constituted 48% and amounted to Rs. 234,310 Lakhs as at March 31, 2021 in accordance with Ind-AS. RFL has been under the Corrective Action Plan ("CAP") of RBI vide its letter dated January 18, 2018 and has been prohibited from expansion of credit/investment portfolio other than investment in government securities and not to pay dividend. Therefore, RFL has focused its efforts on collections, recovery and correcting the asset liability mismatch in its books. During the year RFL paid a sum of Rs. 51,292 Lakhs to its lenders. RFL has approached its lenders with a revised Debt Resolution Plan with REL continuing as RFLs promoter/ sponsor, to correct the asset liability mismatch in its business. RFL has already made provisions on its entire Corporate Loan Book of Rs. 203,670 Lakhs in previous years. RFL retains its presence across 19 branches across SME clusters in India alongwith its experienced SME focused management team. RFL is also actively pursuing legal and regulatory matters towards resolving all issues. RFL is taking necessary corrective actions and making all efforts to come out of the RBI CAP and resume normal business operations at the earliest.

RFLs subsidiary, Religare Housing Development Finance Corporation Limited ("RHDFCL") focuses on providing loans to the affordable housing segment and its total book size stands at Rs. 45,657 Lakhs as on March 31, 2021 in accordance with Ind-AS. The total income and PAT after OCI for the financial year were respectively Rs. 8,251 Lakhs and Rs. 912 Lakhs. The average ticket size for the home loans has been around Rs. 12 Lakhs. RHDFCL has a pan India presence with a network of 26 branches. RHDFCL has remained profitable in each year of its operations since it became a part of the Religare group.

Our Health Insurance business, Care Health Insurance Limited (Formerly known as Religare Health Insurance Company Limited) ("CHIL") registered Gross Written Premium of Rs. 258,802 Lakhs during the Financial Year 2020-21, a growth of 7% over the previous financial year and reported PBT of Rs. 7,549 Lakhs. As at March 31, 2021, CHIL has established a Pan-India distribution network of 155+ branches. It services over 1100+ locations across the Country and has a hospital network of 15,000+ hospitals and healthcare centres. It offers 25 products to cater to varied customer needs. CHIL follows a multi-product and multi-channel distribution strategy. Its products span across retail health, group health, travel insurance, etc. and it has a good channel mix consisting of agency, brokers, corporate agents, online and bancassurance.

The Retail Broking business, which comprises of Religare Broking Limited ("RBL") and Religare Commodities Limited ("RCL"), reported revenue of Rs. 24,087 Lakhs and Rs 532 Lakhs respectively during FY21. The PAT for RBL and RCL was Rs. 685 Lakhs and Rs. 367 Lakhs respectively for the financial year ended March 31, 2021. RBL services more than one million unique customers and has presence in 400+ towns and cities across India. RBL provides multi-platform options such as Branch, Web, App, Call n Trade to enhance customer convenience and ease. RBL also has Bancinvest partnerships with various banks like IndusInd Bank Limited, Andhra Bank, Bank of Maharashtra, Corporation Bank, Karur Vysya Bank Limited, South Indian Bank Limited, UCO Bank and Union Bank of India etc.

CHANGE IN NATURE OF BUSINESS

During the year under review, there was no change in the nature of business of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Managements Discussion and Analysis Report for the year under review detailing economic scenario and outlook, as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR Regulations") is presented in a separate section and forms an integral part of this Report.

DIVIDEND AND RESERVES

Keeping in view of the past losses and future requirements, no dividend has been declared by the Company for the financial year ended March 31, 2021.

Under section 45-IC(1) of Reserve Bank of India Act, 1934, non-banking financial companies (NBFCs) are required to transfer a sum not less than 20% of its net profits to reserve fund. Accordingly, the Company has transferred a sum of Rs. 1,279.94 Lakhs to its reserve fund.

The Company had formulated and approved a Dividend Distribution Policy ("the Policy") pursuant to the requirement under the SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2016 in its meeting held on October 26, 2016. Details of the same have been uploaded on the website of the Company and can be accessed through the link i.e. https://www.religare.com/pdf/Rel Dividend PolicyNov2016.pdf

However, the members may please note that the Reserve Bank of India ("RBI") vide its letter dated April 5, 2019 has advised the Company to stop paying dividends till further orders from RBI and has continued that restriction vide its letter dated December 19, 2019.

SUBSIDIARIES & JOINT VENTURES

As at March 31, 2021, your Company has 25 direct and indirect subsidiaries. During the year under review, the businesses of the Company and its subsidiaries and changes, if any, have been explained elsewhere in this report and Management’s Discussion and Analysis Report. In terms of Section 129(3) of the Companies Act, 2013 ("Act"), your Company has prepared a statement containing the salient features of the Financial Statements of our subsidiaries & joint ventures in the prescribed format AOC-1 which is attached to the Consolidated Financial Statements of the Company. The said statement contains a report on the performance and financial position of each of the subsidiaries and hence is not repeated here for the sake of brevity. Further, the details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management’s Discussion and Analysis Report.

As at March 31, 2021, your Company has 1 joint venture i.e. IBOF Investment Management Private Limited in which the Company holds 50% share capital.

Religare Finvest Limited ("RFL")

1. Capital Adequacy Ratio

The Capital to Risk Weighted Assets ratio ("CRAR") of RFL as on March 31, 2021 is below the prescribed limit. Reserve Bank of India ("RBI") vide its letter dated January 18, 2018 has advised RFL to adhere to corrective action plan ("CAP") given by it. The said CAP, interalia, prohibits RFL from expansion of credit/investment portfolios other than investment in Government Securities and advices RFL not to pay dividend. In this regard, RFL is taking the necessary corrective measures as advised by RBI to seek removal of CAP in the due course.

RFL has also made defaults in repayment of its obligation towards its lenders and an amount of Rs. 3,296.02 crore (Rs. 1,771.21 crore as on March 31, 2020) are overdue as on March 31, 2021. Further, RFL has not redeemed the Unsecured Rated Listed Redeemable Non-Convertible Subordinated Debentures aggregating to Rs. 10,620 lakhs comprising of principal of Rs. 10,000 lakhs and interest of Rs. 620 lakhs on the date of maturity i.e. April 30, 2021.

2. Corporate Loan Book

RFL has an exposure of Rs. 203,670 Lakhs as per financials as at March 31, 2021 towards the Corporate Loan Book. RBI has raised concerns in the past about the credit worthiness of the borrowers, credit appraisal and loan sanctioning mechanism followed by RFL in respect of this book. Based on the maturity dates of the loans, recovery steps instituted and the financial reports of the borrowers, RFL had, on a prudent basis, made full provision of Rs. 203,670 Lakhs during the previous years against this portfolio. Insolvency proceedings have been initiated before the Hon’ble NCLT Delhi against the Borrowers forming part of the Corporate Loan Book. RFL has filed petitions in Hon’ble NCLT for recovery of corporate loans. However, the Hon’ble Supreme Court has stayed these proceedings in a hearing of the matter titled Daiichi Sankyo Company Limited vs. Oscar Investments Limited. REL, RFL and RCTL have filed application for intervention which has been allowed by the Supreme Court. The application for vacation of stay is heard by the Hon’ble Court and the judgement is reserved on the same.

RFL had filed a criminal complaint on December 19, 2018 before the Economic Offence Wing (EOW), for various criminal actions committed by the erstwhile promoters and other associated persons/entities. The EOW filed its charge sheet on January 5, 2020 against various accused persons and entities. The Enforcement Directorate has suo-moto lodged an enforcement case under the Prevention of Money Laundering Act. The ED has filed its charge sheet on January 10, 2020 and cognizance has also been taken by the Court. The Company and RFL have also filed a complaint with CBI against various accused under various sections of Indian Penal Code, 1860. RFL is actively pursuing the recovery steps in the matter and is hopeful of recoveries.

3. Debt Resolution Plan

During the year ended March 31, 2021, RFL has submitted revised Debt Restructuring Plan (DRP) to the lenders and proposed revised DRP, with Religare Enterprises Limited (REL / Company) continuing as the promoter of RFL. The Lead Banker of RFL in aforesaid DRP i.e. State Bank of India (SBI) has vide letter dated 03.06.2021 conveyed that the aforesaid proposal is under consideration on merit (with REL as a shareholder) and the same will be considered if it is in compliance of RBI circular dated June 07, 2019 (DBR No. BPBC. 45 /21.04.048 /2018-2019) subject to necessary internal approvals

by all Consortium Lenders. It was also conveyed that this does not amount to a commitment on its part to re-structure the facility sanctioned to RFL. Thereafter, the Company has raised requisite funds via preferential allotment of equity shares in order to repay the loans due to RFL from the Company and its subsidiary to meet the pre-condition of the proposed DRP. However, considering that the revised DRP approval/implementation will take some time; lenders decided to appropriate Rs. 400 Crores on 31 March 2021 out of the funds lying in the current account of RFL maintained with SBI. The funds were distributed in accordance with the proposed DRP. The financial statements of RFL have been prepared on Going Concern basis.

4. Matters related to Strategic Credit Capital Private Limited ("SCCPL") and its Associates

(i) As disclosed in previous annual reports, during the year ended March 31, 2018, RFL entered into a settlement agreement with SCCPL and its associate companies for withdrawing various litigations against each other in respect of assignment of loans by RFL to SCCPL. RFL is pursuing recovery of Rs. 79,367.20 Lakhs (fully provided for) from SCCPL. Despite the settlement, SCCPL and its associates have filed a suit before the Honble District Court Saket seeking various reliefs and also seeking discharge of their obligations under the Settlement Agreement. RFL and REL have filed application for dismissal of suit. The matter is sub-judice.

(ii) SCCPL & Participation Finance & Holdings (India) Pvt. Ltd. (PFH) have filed a commercial civil suit before Honble Delhi High Court against Lakshmi Vilas Bank (LVB), wherein they have arrayed the Company and other entities as party. SCCPL and PFH are seeking various reliefs in the petition against LVB and amongst other relief, a direction against the RFLs fixed deposits placed with LVB. An interim order dated February 22, 2018 was passed to maintain status quo regarding the Religare trademark as described in the Schedule of the Deed of Assignment. The Company has also filed application for rejection of plaint under order-VII Rule-11 and application u/s 340 Cr.PC against SCCPL for filing fabricated indemnification cum release agreement. Further, Loancore Servicing Solutions Pvt. Ltd. (Loancore) has filed substitution on behalf of SCCPL by way of assignment deed. Thereafter, SCCPL also moved an application u/o 39 R-1/2 of CPC seeking injunction against the Company & RFL, restraining them from selling lending business. The said application was disposed-off on August 9, 2019 in terms of order dated February 22, 2018. Now the case is listed for disposal of interim applications. The matter is sub-judice.

(iii) RFL has also filed insolvency proceedings against SCCPL and Perpetual Capital and Servicing Pvt. Ltd. (PCSPL). The matters are sub-judice.

(iv) RFL has also filed various complaints with EOW, New Delhi against, SCCPL, Mr. Francis Daniel Lee, Mr. Mohnish Mukkar and their associates for various offences including but not limited to cheating, misappropriation, forgery, criminal intimidation, extortion, criminal breach of trust, and criminal conspiracy against SCCPL and its associate entities & individuals.

5. Fixed Deposits with Lakshmi Vilas Bank

In relation to adjustment of fixed deposits of Rs. 79,145 Lakhs (excluding Rs. 2,703.39 Lakhs interest accrued & due till the date of original maturity i.e. July 20, 2018) with and by the Lakshmi Vilas Bank (LVB) against the loans given to erstwhile promoter group companies in the previous years, RFL had filed a suit for recovery of fixed deposits amounting to Rs 79,145 Lakhs misappropriated by LVB on May 31,2018 before the Honble Delhi High Court. The Honble Delhi High Court passed interim Orders directing that status quo be maintained in respect of RFLs current account maintained with LVB. Further, State Bank of India and SCCPL alongwith its associates have filed application for impleadment in the said suit.

Apart from civil suit for recovery, RFL had also filed a criminal complaint against LVB and others on May 15, 2019 with Economic Offences Wing, Delhi (EOW). The EOW has registered a FIR bearing no. 189 of 2019 dated September 23, 2019 against LVB & Ors. for committing offence of criminal breach of trust and criminal conspiracy. RFL has also placed on record, the FIR lodged by it against LVB & ors.

The EOW has filed its charge sheet on March 23, 2020, cognizance on which is yet to be taken by the Court. The matter is sub-judice. Also, the Enforcement Directorate has lodged an ECIR on the basis of the FIR lodged by EOW.

While the matter continued to be under litigation at Honble High Court of Delhi for declaration and recovery, RFL has filed application to the Honble Court for substitution of LVB with DBS Bank India Limited (DBS). Further, State Bank of India and SCCPL along with its associates have filed application for impleadment in the said suit. The matter is sub judice.

MAJOR EVENTS

> Re-classification of Promoters and Promoters Group

With respect to the Companys application with stock exchanges for re-classification of existing Promoters and Promoters Group submitted on July 31, 2020 post requisite approvals of the Board of Directors and Shareholders, the Company has received approval of both the stock exchanges viz. National Stock Exchange of India Limited and BSE Limited on June 11, 2021 and June 12, 2021 respectively for re-classification of following Promoters & Promoter Group into public category:

Promoters

1. Malvinder Mohan Singh

2. Shivinder Mohan Singh Promoters Group

3. Japna Malvinder Singh

4. Aditi Shivinder Singh

5. Abhishek Singh

6. RHC Finance Private Limited

7. RHC Holding Private Limited

8. PS Trust (held in the name of Malvinder Mohan Singh & Shivinder Mohan Singh)

In this regard, 30,000 shares held / acquired by Nimrita Parvinder Singh (whom the Company believed to be the Daughter of Malvinder Mohan Singh, one of the erstwhile Promoters) for the quarters ending December 31, 2020 and March 31, 2021 were included in the Shareholding Pattern under the category of Promoters Group only to comply with Companys disclosure requirements in terms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations) since she was falling under definition of Promoter Group provided in the SEBI ICDR Regulations.

However, now consequent to the approval of Re-classification of Promoters (Malvinder Mohan Singh & Shivinder Mohan Singh) into Public Category, Nimrita Parvinder Singh is automatically out of Promoters Group as defined in SEBI ICDR Regulations and hence is not being classified under the Promoters / Promoters Group in the Shareholding Pattern of the Company w.e.f. June 12, 2021.

Pursuant to the Re-classification of Promoters / Promoters Group, the Company has now become a "Listed entity with no Promoters".

> Raising of funds through the Preferential Allotment

Post March 31, 2021, the Company has raised funds of Rs. 570 Cr. through preferential allotment of 5,41,56,761 equity shares in terms of SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2018 on July 14, 2021 at issue price of Rs. 105.25 per share (including a premium of Rs. 95.25 per share) in terms of the approval of the Board of Directors and Shareholders of the Company obtained on June 08, 2021 and July 03, 2021 respectively.

The Company is utilizing the funds as per the objects mentioned in notice of extra-ordinary general meeting send to shareholders for approval.

> Composite Scheme of Arrangement

On December 18, 2019, the Board of Directors of the Company approved, subject to requisite approvals, the draft Scheme of Amalgamation ("Scheme") that is designed to simplify the Group corporate structure. In terms of the Scheme, four (4) direct/indirect wholly owned subsidiaries of the Company namely, Religare Comtrade Limited, Religare Insurance Limited, Religare Advisors Limited and Religare Business Solutions Limited will merge with/into the Company subject to terms and conditions as provided in the Scheme. Further, the earlier Scheme approved by the Board on May 23, 2019 was withdrawn accordingly.

The Scheme is in continuation of the steps the Company has taken in the past to simplify the structure and has the following rationale:

• No active business has been carried on by the Transferor Companies. Further, as on date, all liabilities owed by the Transferor Companies are payable to the group entities which are ultimately consolidated into the Transferee Company. Considering the present economic environment, consolidation of the said entities is envisaged through this Scheme.

• The Scheme will also result in simplification of holding structure, thereby resulting in reduction in multiplicity of legal and regulatory compliances, reduction of costs and pooling of common resources.

• The Scheme will also facilitate the Transferee Company to meet obligations of the Transferor Companies.

The Scheme has been filed with the Honble NCLT on October 31, 2020.

> Divestment of partial stake in Health Insurance Business

The Company has entered into the definitive agreements (Share Subscription and Share Purchase Agreement and Shareholders Agreement) on February 06, 2020 with M/s. Kedaara Capital Fund II LLP and M/s. Trishikhar Ventures LLP (jointly referred as ‘Kedaara ) for divestment of part of its stake in Religare Health Insurance Company Limited (name changed to Care Health Insurance Limited w.e.f. August 19, 2020) ("CHIL").

Pursuant to same, the Company has divested part of its investment in CHIL, a subsidiary company on June 02, 2020 to Kedaara. The total investment made by Kedaara to acquire shares of CHIL is Rs. 56,730.54 Lakhs which comprises of primary capital infusion of Rs. 30,000 Lakhs in CHIL and Rs. 26,730.54 Lakhs for the purchase of its shares from existing shareholders of CHIL, including purchase of 6.39% stake from the Company against a consideration of Rs. 20,000 Lakhs. The Company currently holds 68.72% stake in CHIL.

> Settlement with Axis Bank Limited

In relation to order dated March 21, 2018 passed by Honble Debt Recovery Tribunal -II, New Delhi (DRT - II) in the Original Application filed by Axis Bank Ltd. ("OA") apart from other parties, the Company, Religare Capital Markets Ltd ("RCML"), and Religare Capital Markets International (Mauritius) Limited ("RCMIML"), were made parties for recovery of Rs. 31,293.93 Lakhs in relation to a loan facility obtained by RCMIML from Axis Bank which was, inter alia, secured by personal guarantees executed by Mr. Malvinder Mohan Singh and Mr. Shivinder Mohan Singh and certain other securities provided to Axis Bank. The Company has not provided any guarantee/security in relation to the facility obtained by RCMIML from Axis Bank. In the matter, in view of the full and final payment made by the Company to Axis Bank in terms of the Consent Agreement dated October 01, 2019 entered into amongst the Company, RCML, RCMIML and Axis Bank, the Honble Tribunal vide its order dated July 13, 2020 has deleted REL, RCML and RCMIML from the array of parties and Interim orders passed on March 21, 2018 and August 26, 2019 against REL, RCML and RCMIML stand vacated. In accordance with the Consent Agreement, a payment of Rs. 17,000 Lakhs has been made by the Company to Axis Bank.

REGULATORY UPDATES

Reserve Bank of India ("RBI")

RBI conducted an inspection of the Company under section 45N of the Reserve Bank of India Act, 1934 in the month of December 2020 for the financial position as on March 31,2020. The Supervisory Concerns were issued by the RBI in April 2021 pursuant to said inspection.

Further, vide Supervisory Concerns / Advisory Letter dated December 19, 2019 issued by the RBI for inspection for the financial position as on March 31,2019, RBI has advised the Company to continue to be debarred from declaring the dividends.

Securities and Exchange Board of India ("SEBI")

i. In connection with the investigation of the Company/REL initiated by SEBI in February 2018, the Company and its subsidiary RFL have cooperated in the aforesaid investigation and have provided the requisite information / documents from time to time and made necessary submissions with SEBI.

SEBI vide its Order dated November 12, 2020 has issued directions to initiate adjudication proceedings under appropriate legal provisions against certain entities mentioned in the said Order.

Thereafter, the Company/REL received the Show Cause Notice dated November 17, 2020 from SEBI in the matter through which REL was called upon to show cause as to why appropriate directions, as deemed fit, under Sections 11B (1) and 11(4) read with Section 11(1) of SEBI Act 1992 and Section 12A(1) of SCRA Act, 1956 should not be issued against it. REL is further called upon to show cause as to why appropriate directions for imposing penalty under Sections 11(4A) and 11B (2) read with Section 15HA and 15HB of SEBI Act, 1992 and Section 12A (2) read with Section 23E of the SCRA Act, 1956 and SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 and Securities Contract (Regulation) (Procedure for holding inquiry and imposing penalties) Rules, 2005 should not be issued against REL.

Charges alleged on REL relates to violation of provisions of Sections 12A (a) (b) & (c) of the SEBI Act, 1992 and Regulations 3(b), 3(c) & 3 (d), 4(1), 4(2)(f), and 4(2)(r) of the SEBI (PFUTP) Regulations, 2003 as well as clauses 32 and 36 of the Listing Agreement, Clause 49(I)(C)(1)(a) & 49(I)(C)(1)(d) of the Listing Agreement [post circular dated April 17,2014] read with Regulation 103 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("SEBI (LODR) Regulations") and Section 21 of the SCRA Act, 1956; Regulations 4(1)(a), 4(1)(b), 4(1)(c), 4(1)(d), 4(1)(g), 4(1)(h), 4(1)(i), 4(1)(j), 30(1), and 48 of SEBI (LODR) Regulations.

RFL also received a Show Cause Notice dated November 17, 2020 in which the charges alleged on RFL relates to violation of provisions of Section 12A(a) (b) & (c) of the SEBI Act and Regulations 3(b), 3(c) & 3 (d) and 4(1) of the SEBI (PFUTP) Regulations, 2003 read with Section 11(4), (4A) and 11B (1) & (2) of the SEBI Act, 1992 and the SEBI (Procedure for holding inquiry and imposing penalties) Rules, 1995. RFL was called upon to show cause as to why appropriate directions, as deemed fit, under Sections 11B (1) and 11(4) read with section 11(1) of SEBI Act should not be issued against it. RFL is further called upon to show cause as to why appropriate directions for imposing penalty under Sections 11(4A) and 11B(2) read with Section 15HA of SEBI Act SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 should not be issued against RFL.

REL & RFL have jointly filed reply on February 11, 2021 and part arguments have also been heard by the Whole Time Director.

In accordance with the SEBI (Settlement Proceedings) Regulations, 2018 and guidelines and circulars issued by SEBI, RFL and REL have also filed a joint application for settlement (without prejudice) on March 31, 2021. The matter has been kept for adjudication of the settlement application.

ii. In the matters of interim ex-parte Order passed by SEBI on October 17, 2018, read with Confirmatory Order dated March 19, 2019 and modified directions dated June 28, 2019 in the matter of Fortis Healthcare Limited ("FHL") ("SEBI Order") an appeal was preferred by Religare Finvest Limited ("RFL"), subsidiary company of REL, against the SEBI Order. After hearing the parties, the Securities Appellate Tribunal ("SAT") has passed an Order dated January 29, 2020 quashing and setting aside the SEBI Order qua RFL. The SAT has remitted the matter to Whole-time Member ("WTM") of SEBI for passing fresh order, if they so desire after giving an opportunity of hearing to RFL.

SAT has further directed RFL to maintain its assets worth Rs. 200 crores for a period of three months from the SAT Order. If the WTM is unable to pass any Order within the said period, this limited restraint order passed by the SAT will come to an end.

In the said matter, Fortis Hospitals Ltd. has filed a suit for recovery from RFL & Ors. on the basis the SEBI Order dated October 17, 2018 and confirmatory Order March 19, 2019. The matter is sub-judice.

Thereafter, SEBI passed another order dated 12th Nov, 2020 (WTM/GM/IVD/ID2/48/2020-21) wherein, SEBI by virtue of Section 19 read with sections 11 and 11B of SEBI Act, 1992 has revoked the directions issued vide the order date 19th March, 2019 read with order dated 28 June, 2019 against Best Healthcare Private Limited, Fern Healthcare Private Limited and Modland Wears Private Limited and has also disposed of the ongoing proceedings under section 11 /11 B of the SEBI Act, 1992 against them. SEBI further has directed that the Adjudicating Officer appointed in the matter pursuant to this order shall carry out the adjudication proceedings in an independent manner without getting influenced by this order of revocation.

Recently, SEBI has issued a notice dated 09th April, 2021 (EAD-4/ADJ/GR/KG/OW/8529/1/2021) to various entities/ individuals vide which, RFL has been called upon to show cause as to why an inquiry should not be imposed under sections 15HA and 15HB of the SEBI Act, 1992, within 14 days from the date of the receipt of the said notice. RFL has filed its reply along with settlement application which is pending for disposal as on date.

Serious Fraud Investigation Office ("SFIO")

In the matter of ongoing investigation of the Company initiated by SFIO in February 2018, as ordered by Ministry of Corporate Affairs, Government of India, the Company and its subsidiaries have been cooperating in the aforesaid investigation and have been providing the requisite information / documents from time to time.

LEGAL UPDATES

a. Cancellation of allotment of 2,50,00,000 Preference Shares issued to RHC Finance Pvt. Ltd.

The Company has filed a petition before Hon’ble NCLT, Delhi under Section 55 read with Section 59 and other applicable provisions of the Companies Act, 2013 seeking rectification of register of members of the Company. The said petition is filed with the prayer to order declaring that the allotment of 2,50,00,000 0.001% Non-Convertible Redeemable Preference Shares issued by the Company to RHC Finance Private Limited on August 30, 2016 as void ab initio and /or otherwise unlawful, and to consequently cancel the said allotment. The matter is sub-judice. The amount outstanding against such preference shares as on March 31,2021 is Rs. 4,030.06 lakhs.

b. Redemption of 15,00,000 preference shares

In the matter of Daiichi Sankyo Company Limited vs. Malvinder Mohan Singh & Others (Petition O.M.P. (EFA) (COMM) NO. 6 OF 2016), an interim application has been filed by the Company disputing its liability as a garnishee. The Company has not redeemed 15,00,000 preference shares due for redemption on October 31, 2018 and disputed the liability stating the transaction to be an illegal one. The Hon’ble High Court of Delhi remarked that it expected REL to file a complaint with the concerned Police Station. Accordingly, in compliance thereof, REL has filed an affidavit disclosing names of persons who were on Board of Directors at relevant times and has also filed a criminal complaint on March 22, 2019 with the Economic Offences Wing, Delhi Police (EOW) for various offences under the Indian Penal Code, 1860 w.r.t transactions relating to issuance and redemption of Preference Shares. The Complaint is filed with the EOW. Investigating Officer is assigned in the matter and notice is issued to the accused. The Company has been served with warrants of attachment as Garnishee, which is being contested / challenged. In Supreme Court there are the contempt proceedings against the Singh Brothers for allegedly violating Delhi High Court orders and selling their stake in Fortis Healthcare Limited. Hon’ble Supreme Court of India has stayed the proceeding which was pending before the NCLT, New Delhi for passing order on admission hearing of insolvency petitions. Now, RFL, REL and RCTL are impleaded as a party in the said proceedings.

However, the Company has created an adhoc provision of Rs 1,209.06 Lakhs towards the potential interest liability from the redemption date till March 31,2021.

The term sheet signed by the Company provides a Redemption Event that "holders of the Preference Shares, may have the option to subscribe to equity shares in REL though preferential allotment worth the Due Amount subject to approval of the shareholders at the time if required and subject to compliance with SEBI regulations and other applicable law.

c. Petition against the Company under Insolvency and Bankruptcy Code, 2016

Loancore Servicing Solutions Pvt. Ltd. (Loancore) allegedly filed as operational creditor to initiate corporate insolvency resolution process ("CIRP") under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") read with rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority ) Rule, 2016 on the basis of the Penalty Fee Agreement of Rs. 125 Crore approx. As per the Company’s understanding said petition was not maintainable on grounds: (a) the Company is in financial services sector and hence can be referred to CIRP under IBC only by RBI; (b) There is no as such Penalty Fee Agreement with Loancore approved by the Board of Directors of the Company ever. The petition has been dismissed for default on July 28, 2021 in the NCLT, Delhi.

d. Petition for rectification of Register of Members of the Company

Loancore Servicing Solutions Pvt. Limited has filed a petition with the Hon’ble NCLT, Delhi under Sections 58 and 59 of the Companies Act, 2013 seeking rectification of Register of Members of the Company. The Company is contesting the same on maintainability of the petition. The matter is currently sub-judice. The Board and management strongly believe that this is a frivolous petition by Loancore and the Company will strongly defend the case.

e. Promoter Indemnity Agreement

In the matter of Malvinder Mohan Singh vs. Religare Enterprises Limited & Ors., in Hon’ble Delhi High Court, Malvinder Mohan Singh has filed Suit for declaration that the termination of Indemnification cum Release Agreement dated November 14, 2017 ("Indemnity") issued by the Company is unlawful. The new Board had cancelled the Indemnity on September 02, 2018. No notice is issued on the said Petition. The Company has raised objections regarding maintainability of suit. The matter is sub-judice.

f. Petition by Finserve Shared Services Limited ("FSSL")

FSSL has filed a petition against the Company under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of the Arbitral Tribunal alleging that the Company had executed a Master Services Agreement dated 09.11.2011 ("MSA’’) with FSSL to centralize the costs of REL by the creation of a separate entity which would provide corporate services to REL and its subsidiaries which would also facilitate the reduction of the overall costs of REL and its subsidiaries and persuaded RHC Holding Pvt Ltd. ("RHC") to make an investment of Rs. 83,900 Lakhs in FSSL, by way of equity, preference and debt. The matter is sub-judice.

g. Non-redemption of preference shares by Religare Capital Markets Limited ("RCML")

RHC Holding Pvt Limited has filed a petition against RCML under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of the Arbitral Tribunal demanding the payment of its investment amount in the preference share capital of RCML of Rs. 52,447 Lakhs along with premium of Rs. 53,841 Lakhs which has been due for redemption but not redeemed by RCML due to losses. The Company has also been arrayed as party to the said petition. The matter is sub-judice.

CHANGE OF THE REGISTERED OFFICE

During the financial year ended March 31, 2021, the registered office of the Company has been shifted from "2nd Floor Rajlok Building, 24, Nehru Place, New Delhi 110019" to First Floor, P-14, 45/90, P- Block, Connaught Place, New Delhi -110001 w.e.f. May 13, 2020.

EQUITY SHARE CAPITAL

The current Authorized Share Capital of the Company is Rs. 816,45,00,000/- (Rupees Eight Hundred Sixteen Crores Forty Five Lakhs only) divided into 65,44,50,000 (Sixty Five Crores Forty Four Lakhs and Fifty Thousand) Equity Shares of Rs. 10/- (Rupees Ten only) each and 16,20,00,000 (Sixteen Crores Twenty Lakhs) Redeemable Preference Shares of Rs. 10/- (Rupees Ten only) each.

During the year under review, the issued, subscribed and paid up equity share capital of the Company was increased from Rs. 258,12,81,520 (Rupees Two Hundred Fifty Eight Crores Twelve Lakhs Eighty One Thousand Five Hundred and Twenty only) consisting of 25,81,28,152 (Twenty Five Crores Eighty One Lakhs Twenty Eight Thousand One Hundred and Fifty Two only) equity shares of Rs. 10/- (Rupees Ten only) each to Rs. 259,41,39,020 (Rupees Two Hundred Fifty Nine Crores Forty One Lakhs Thirty Nine Thousand and Twenty only) consisting of 25,94,13,902 (Twenty Five Crores Ninety Four Lakhs Thirteen Thousand Nine Hundred and Two only) equity shares of Rs. 10/- (Rupees Ten only) each.

The issued, subscribed and paid up equity share capital as on March 31,2021 is Rs. 259,41,39,020/-.

Post March 31, 2021 and till the date of this report, the Company allotted 78,000 Equity Shares of face value of Rs. 10/- each at exercise price of Rs. 29.43 each pursuant to exercise of stock options granted under the Religare Enterprises Limited Employee Stock Option Plan 2019 and 54,156,761 Equity Shares of face value of Rs. 10/- each under the Preferential Issue of Equity Shares made in terms of the SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2018. Pursuant to the said allotments, the issued, subscribed and paid up equity capital of the Company stands increased from Rs. 259,41,39,020/- divided into 25,94,13,902 equity shares of Rs. 10/- each to Rs. 313,64,86,630/- divided into 31,36,48,663 equity shares of Rs. 10/- each.

PREFERENCE SHARE CAPITAL

The Company has two types of Preference shares outstanding as on date comprising 15 lakhs 13.66% Cumulative Non-Convertible Redeemable Preference Shares of Rs. 10/- each issued in 2008 (2008 Preference Shares) and 2.5 crores 0.01% Non-Cumulative Non-Convertible Redeemable Preference Shares of Rs. 10/- each issued in 2016 (2016 Preference Shares).

The Company did not redeem the 2008 Preference Shares on due date of October 31,2018 basis the interim application filed before the Hon’ble High Court of Delhi praying among other reliefs for the stay of redemption pending the outcome of investigations into the affairs of the Company and its subsidiaries already initiated by SEBI and SFIO.

Further, due to non-payment of dividend by the Company continuously for two years on 2016 Preference Shares, the holder of these shares are entitled for voting rights of approx. 8.81% on the total voting capital of the Company. The Company has also not paid dividend on 2008 Preference Shares but the Company has a letter dated August 20, 2012 from then holder of these shares irrevocably and unconditionally waiving off the voting rights on 2008 Preference Shares.

The Company has filed the petition before the Honble National Company Law Tribunal, New Delhi Bench on June 14, 2019 seeking rectification of Register of Members of the Company by cancellation of 2016 Preference Shares and any other appropriate reliefs, including interim relief with respect to freezing of voting rights and dividend rights attached to the said 2016 Preference Shares. The matter is sub judice.

NON-CONVERTIBLE DEBENTURES

There are no outstanding non-convertible debentures as on date.

PUBLIC DEPOSITS

Your Company has neither invited nor accepted any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 during the period under review.

ANNUAL RETURN

As per the requirements of Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013 read with Rules framed thereunder, the draft Annual Return as on March 31,2021 is available on website of the Company and can be accessed through the link https://www.religare.com/Annual-Returns.aspx

CAPITAL REQUIREMENTS

Your Company is registered with the Reserve Bank of India ("RBI")1 as a Non-Deposit Taking Systemically Important Core Investment Company ("CIC-ND-SI") vide Certificate No. N-14.03222 dated June 03, 2014. In terms of the RBI Notification dated August 13, 2020, the CIC-ND-SI will henceforth be termed as Core Investment Company. The Company primarily functions as an investment holding company with more than 90% of its total assets consisting of investments in shares of subsidiary companies/ joint venture companies.

As a Core Investment Company, the Company is required to -

a. maintain minimum Adjusted Net Worth of 30% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items as on the date of the last audited balance sheet as at the end of the financial year; and

b. restrict the outside liabilities up to 2.5 times of its Adjusted Net Worth as on the date of the last audited balance sheet as at the end of the financial year.

The Company is in compliance with the abovementioned requirements as at March 31, 2021.

RELIGARE EMPLOYEES STOCK OPTION SCHEMES

Nomination and Remuneration Committee ("Committee") of the Board of Directors of the Company, inter alia, administers and monitors the Employees Stock Option Schemes of the Company in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (erstwhile Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999) (the SEBI ESOP Regulations).

During the year under review, the Committee granted 11,500,000 stock options under the "Religare Enterprises Limited Employees Stock Option Plan 2019" and further 2,500,000 stock options were granted after the close of the FY 2021 till the date of this Report.

Details as required under the SEBI ESOP Regulations, for Religare Employees Stock Option Scheme 2010, Religare Employees Stock Option Scheme 2012 and Religare Employees Stock Option Plan 2019 have been uploaded on the website of the Company and can be accessed through the link https://www.religare.com/Emplovee-Stock-Option-Schemes.aspx

There is no other material change in the ESOP schemes of the Company during the year.

Certificate from the Auditors confirming that schemes have been implemented in accordance with the SEBI ESOP Regulations will be available for inspection by the members in the forthcoming Annual General Meeting of the Company.

1 RBI Disclaimer:

(a) Reserve Bank of India does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for discharge of liability by the company; (b) Neither is there any provision in law to keep, nor does the company keep any part of the deposits with the Reserve Bank and by issuing the Certificate of Registration to the company, the Reserve Bank neither accepts any responsibility nor guarantee for the payment of the public funds to any person/ body corporate.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

All Independent Directors (IDs) have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 of SEBI LODR Regulations. All the IDs of the Company have registered their names with the data bank of IDs maintained by the Indian Institute of Corporate Affairs (IICA). Further, in terms of Regulation 25(8) of the SEBI LODR Regulations, the Independent Directors have confirmed that they are not aware of any circumstances or situation which exist or may be anticipated, that could impair or impact their ability to discharge their duties. Further, in the opinion of the Board, Independent Directors qualify the criteria of Independent Director as mentioned in the Act and SEBI LODR Regulations and are independent of the management.

Further, all the Directors of the Company have confirmed that they satisfy the "fit & proper" criteria as prescribed in the Directors Fit & Proper Policy of the Company.

Following changes occurred in the directorships / key managerial positions (KMP) of the Company during the FY 2020-21:

Sr. No. Name of Director Particulars of Change (Appointment / Resignation/Others) Effective Date of change
1 Dr. Vijay Shankar Madan Appointed as Non-Executive Independent Director February 10, 2021
2 Mr. Hamid Ahmed Appointed as Non-Executive Independent Director February 10, 2021
3. Ms. Sabina Vaisoha Resigned as Non-Executive Independent Director February 10, 2021

The Board places on record its appreciation and gratitude to Ms. Sabina Vaisoha for her participation in the Board of the Company during her tenure.

Post end of the financial year 2021, Mr. Sushil Chandra Tripathi, Non-Executive & Independent Director was passed away after a long battle with Covid -19 on May 19, 2021. The Board expresses its heartfelt condolences for his untimely death and wishes to put on record its sincere and deep appreciation for his invaluable guidance and contribution during his tenure. The Company immensely benefitted from his vision, enriched experience and leadership during his tenure on the Board of the Company

In terms of Section 203 of the Act, following are the KMPs of the Company as on March 31,2021:

1. Dr. Rashmi Saluja, Executive Chairperson

2. Mr. Nitin Aggarwal, Group Chief Financial Officer

3. Ms. Reena Jayara, Company Secretary

In accordance with the provisions of the Companies Act, 2013 and Regulation 36 of the SEBI LODR Regulations, Dr. Rashmi Saluja (DIN: 01715298), retires at the ensuing Annual General Meeting (AGM), and being eligible offers herself for re-appointment. The brief resume and other details relating to the directors, who are to be re-appointed as stipulated under Regulation 36(3) of the SEBI LODR Regulations and Secretarial Standards issued by ICSI, are furnished in the Notice of the ensuing AGM. The Board of Directors recommends the re-appointment of the Director liable to retire by rotation at the ensuing AGM.

BOARD EVALUATION

Pursuant to the provisions of the Act and SEBI LODR Regulations, the Board is required to carry out an annual performance evaluation of its own performance, the performance of the directors individually as well as the evaluation of the working of its Committees.

The performance evaluation of the members of the Board, the Board level Committees and Board as a whole was carried out in June 2021 as per the Board Evaluation Policy of the Company. The manner in which evaluation has been carried out and criteria of evaluation has been explained in the Corporate Governance Report.

REMUNERATION POLICY

Remuneration Policy formed by the Board on the recommendation of the Nomination and Remuneration Committee is in place for selection and appointment of Directors, Key Managerial Personnel and their remuneration as well as policy on other employees’ remuneration. The Remuneration Policy is stated in the Corporate Governance Report. The relevant Policy(ies) have been uploaded on the website of the Company and can be accessed through the link https://www.reliaare.com/Policies.aspx

BOARD/COMMITTEE COMPOSITION AND MEETINGS

A calendar of meetings is prepared and circulated in advance to the Directors. The details of composition of Board and Committees and their meetings held during the year are given in the Corporate Governance Report which forms integral part of this Report. The intervening gap between the Meetings was within the period prescribed under the Act and the SEBI LODR Regulations.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

In compliance with Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended, the Company has established a Corporate Social Responsibility ("CSR") Committee. The CSR Committee has formulated and recommended to the Board, a CSR Policy which provides the overview of projects or programs and the guiding principles for selection, implementation and monitoring of the CSR activities, which has been approved by the Board. The strategic intent was to adopt a unified cause across the Religare Group and hence the CSR policy and program to be supported has been cascaded across all Group entities.

The Company was not required to spend money under CSR for financial year ended 2020-21 as prescribed under Section 135 of the Act since the Company incurred an average net losses of Rs. 11,804 Lakhs for last three financial years.

Annual Report on CSR in the format prescribed in Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended is attached as "Annexure A".

AWARDS & RATINGS

Following awards and recognitions were received by the subsidiaries of the Company during the period under review - Awards

• Care Health Insurance Limited (formerly Religare Health Insurance Company Limited):

i. Silver Award for Best Search Marketing Campaign at IAMAI 11th India Digital Summit and Awards.

ii. Best SEO/SEM Campaign at Afaqs DIGIES Digital Awards, 2021

• Religare Commodities Limited: i. Krishi Pragati Award 2021

Ratings

The Company had no ratings during the year under review as there were no outstanding facility(ies) which requires the Company to have any rating.

LISTING ON STOCK EXCHANGES

The Equity Shares of the Company are listed on National Stock Exchange of India Limited and BSE Limited. The annual listing fees for the year 2021-22 have been paid to both the Stock Exchanges.

STATUTORY DISCLOSURES

None of the Directors of your Company is disqualified as per provision of section 164(2) of the Act. The Directors of the Company have made necessary disclosures, as required under various provisions of the Act and the SEBI LODR Regulations.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Regulation 34 of SEBI LODR Regulations and Section 129(3) of the Act, consolidated financial statements of the Company and its subsidiaries are attached to the Annual Report. The consolidated financial statements have been prepared in accordance with Indian Accounting Standard Ind AS-103, "Business Combination" and Ind AS- 110 "Consolidated Financial Statements" issued by The Institute of Chartered Accountants of India and notified by the MCA. The audited consolidated financial statements together with Auditor’s Report form part of the Annual Report.

Though, the Company holds 100% equity share capital in Religare Capital Markets Limited ("RCML"), however in the present scenario controlling through voting rights of RCML is not there with the Company. Beside this, the tripartite agreement entered into, in financial year 2011-12, between REL, RCML and RHC Holding Private Limited ("RHCHPL"), for providing financial support to RCML by RHCHPL (by subscribing Preference Shares of RCML), severe long term restrictions and significant restrictive covenants on major decision making at RCML were imposed by the holder of preference shares. Accordingly in view of the above, the financial statements of RCML and its subsidiaries have been excluded from the consolidated financial statements of the Company w.e.f. October 01, 2011, in accordance with applicable accounting standards. The Company has already provided fully for the entire investment made by it into RCML in previous years.

The Consolidated Financial Statements presented by your Company, including financial information of all its subsidiaries, excluding RCML and RCML’s subsidiaries, have been duly audited by the Statutory Auditors and the same is published in your Company’s Annual Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Even though operations of the Company are not energy intensive, the management has been highly conscious of the importance of conservation of energy and technology absorption at all operational levels and efforts are made in this direction on a continuous basis. In view of the nature of activities which are being carried on by the Company, the particulars as prescribed under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 regarding conservation of energy and technology absorption are not applicable to the Company and hence have not been provided.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company has incurred expenditure of Rs. 2.39 Lakhs (previous year: Rs. 1.08 Lakhs) in foreign exchange and earned Nil (previous year: Nil) in foreign exchange during the year under review on a standalone basis.

MAINTAINANCE OF COST RECORDS

The Company is in the financial services industry. In view of the nature of activities which are being carried on by the Company, the maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Act is not applicable on the Company and hence such accounts and records are not maintained.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

No amount was required to be transferred by the Company to the Investor Education and Protection Fund (IEPF) during the financial year under reporting.

The Company has appointed a Nodal Officer for the IEPF authority, the details of which are available on the website of the Company at https://www.religare.com/investor-contacts.aspx

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

(a) in the preparation of the annual financial statements for the year ended March 31,2021, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;

(b) they 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 at the end of the financial year and of the Profit of the Company for that period;

(c) they 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) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE GOVERNANCE

The Company is committed to uphold high standards of Corporate Governance and adhere to the requirements set out by the Securities and Exchange Board of India.

A detailed report on Corporate Governance alongwith the Certificate of M/s Sanjay Grover & Associates, Company Secretaries regarding compliance with conditions of Corporate Governance as stipulated in Part C of Schedule V of the SEBI LODR Regulations and a certificate from a Practicing Company Secretary that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by Board / Ministry of Corporate Affairs or any such statutory authority forms integral part of this Report.

AUDITORS

M/s S.S. Kothari Mehta & Co., Chartered Accountants, (Firm Registration No. 000756N) ("SSKM"), were appointed as statutory auditors of the Company by the shareholders at the 33rd Annual General Meeting of the Company ("AGM") held on September 21, 2017, to hold office for a period of five consecutive years commencing from the financial year 2017-18 i.e. from the conclusion of 33rd AGM until the conclusion of the 38th AGM to be held in the year 2022.

However, RBI has issued a Circular on ‘Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)’ on April 27, 2021 (RBI SA Guidelines) providing necessary instructions for appointment of SCAs/SAs, the number of auditors, their eligibility criteria, tenure and rotation, etc. while ensuring the independence of auditors.

As per above said guidelines of RBI, Entities will have to appoint the SCAs/SAs for a continuous period of three years, subject to the firms satisfying the eligibility norms each year. Since, SSKM, the existing auditors had already completed a tenure of three years, they shall not be able to continue as Statutory Auditor.

The Company is in receipt of letter dated August 12, 2021 from SSKM communicating their intention to resign as statutory auditors of the Company since they have completed four years of continuous audit and are ineligible to continue as auditors beyond 30 September 2021.

In compliance with the above said regulatory requirement, the Company has evaluated the proposals received from various audit firms eligible to be appointed as Statutory Auditor of the Company. Basis the various proposals received from the eligible audit firms, the Board of Directors of the Company on recommendation of Audit Committee made the appointment of M / s S. P. Chopra & Co., Chartered Accountants (Firm Registration No. 000346N) as Statutory Auditors of the Company w.e.f. August 12, 2021, to fill the casual vacancy caused by resignation of SSKM, till the conclusion of this Annual General Meeting (AGM) and has also recommended for approval of the Members, the appointment of M/s S. P. Chopra & Co., Chartered Accountants (Firm Registration No. 000346N) as Statutory Auditors of the Company for a period of three years from the conclusion of 37th AGM until the conclusion of the 40th AGM to be held in the year 2024. The first year of audit will be of the financial statements for the year ending March 31,2022, which will include the audit / limited review of the quarterly financial results for the year. In this regard, the Company has received certificate to the effect that they satisfy the criteria provided under Section 141 of the Act and RBI SA Guidelines and that the reappointment, if made, shall be in accordance with the applicable provisions of the Act and rules framed thereunder.

AUDITORS’ REPORT

The Reports given by the Auditors on the financial statements of the Company form part of the Annual Report. There is no qualification in the Auditors Report on the standalone financial statements for the financial year ended March 31,2021. The Management response on the Statutory Auditors’ Qualifications on the Company’s consolidated financial statements for the financial year ended March 31,2021 is as below.

Management’s response on the Statutory Auditors’ Qualification on the Company’s consolidated financial statements:

i. Qualification pertaining to Lakshmi Vilas Bank adjusting the fixed deposits of Religare Finvest Ltd., subsidiary of the Company (RFL): RFL had filed a suit for recovery of Fixed Deposits amounting to Rs. 79,145 Lakhs misappropriated by the Lakshmi Vilas Bank ("LVB") on May 31, 2018 before the Hon’ble Delhi High Court that passed interim orders directing that status quo be maintained in respect of RFL’s current account maintained with LVB. RFL has also filed an application to the Hon’ble Court for substitution of LVB with DBS Bank India Limited (DBS). Further, State Bank of India and SCCPL along with its associates have filed application for impleadment in the said suit. The matter is sub judice.

RFL had also filed a complaint against LVB and others on May 15, 2019 with Economic Offence Wing (EOW). The EOW, Delhi has registered a FIR against LVB & Ors. for committing offence of criminal breach of trust and criminal conspiracy. The EOW has filed its charge sheet on March 23, 2020, cognizance on which is yet to be taken by the Court. The matter is sub-judice. Also, the Enforcement Directorate has lodged an ECIR on the basis of the FIR. Further, management has taken appropriate legal remedies and no expected credit loss / provision is required at this point of time.

ii. Qualification pertaining to sale of GNPA of Rs. 3,038.13 lakhs for a value of Rs. 2,278.60 lakhs to a Trust for security receipt as a consideration by Religare Housing Development Finance Corporation Ltd., subsidiary of RFL (RHDFCL): The sale of GNPA to Reliance ARC was concluded within the RBI framework and RHDFCL has obtained true sale opinion for concluding the transaction. Accordingly, RHDFCL has derecognized the NPA loan receivables and has recognized security receipts as investments in the books of accounts. RHDFCL shall recognize profit/loss on the Security Receipts based on the evaluation by independent rating agency as stipulated under RBI Regulation. Under INDAS, the security receipts issued by the trust would full-fill the criteria for a financial asset and has been recognized it in its books.

Further, RHDFCL had obtained third party opinion, which is also supporting the accounting treatment for derecognition of the loan portfolio and recognition of security receipts as Investments as per the applicable provisions of Ind AS particularly Ind AS-109, Financial Statements.

SECRETARIAL AUDITORS’ REPORT

As per provisions of Section 204 of the Act, the Board of Directors of the Company has appointed M/s P I & Associates as the Secretarial Auditor of the Company to conduct the Secretarial Audit. The Secretarial Audit Report for the financial year ended March 31,2021, is annexed to this Report. Management comments on qualification given by auditors in the report are as follows:

i. Levy of fine by the stock exchanges for non-compliance of composition of Audit Committee in terms of the requirement of Regulation 18(1)(b) of the SEBI LODR Regulations during the period from February 26, 2020 to September 02, 2020: Pursuant to requirements SEBI LODR Regulations, the Audit Committee shall comprise of minimum 3 directors as members with 2/3rd of the members to be Independent Directors. The Audit Committee of the Company comprised of 5 members and since 2/3rd of 5 arrive at 3.3, the Company was of the view that 3.3 is to be rounded to the nearest number which arrives at 3. However, post receipt of necessary clarification from the exchanges in the matter, the Company immediately took the corrective steps by re-constitution of the Audit Committee on September 02, 2020 and making the composition in compliance of the exchange requirements. The Company has also paid the fines imposed by Exchanges in the matter.

Further, the secretarial audit reports of material subsidiaries of the Company in FY 2020-21 are annexed to this Annual Report.

PARTICULARS OF INVESTMENTS, LOANS AND GUARANTEES

The Company, being an NBFC, is exempted from the provisions of Section 186 [except sub-section (1)] of the Act. Accordingly, details of particulars of loans, guarantees or investments as required to be provided as per Section 134(3)(g) of the Act are not provided.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. There are no materially significant related party transactions entered by the Company with related parties which may have a potential conflict with the interest of the Company.

All Related Party Transactions are placed before the Audit Committee for approval as per the Related Party Transactions Policy of the Company as approved by the Board. The policy is also uploaded on the website of the Company & can be accessed through the link https://www.reliaare.com/pdf/Related party Transaction Policy 02042019.PDF

Since all related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business and there was no material related party transaction entered by the Company during the year as per Related Party Transactions Policy, no details are required to be provided in Form AOC-2 prescribed under clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

The details of the transactions with related parties are provided in the notes to accompanying standalone financial statements.

RISK MANAGEMENT

The Board of Directors of the Company has constituted a Risk Management Committee, responsible to frame, implement, monitor and periodically review the effectiveness of the risk management plan and make appropriate changes as and when necessary.

The Company is a Core Investment Company and therefore as an investment holding company the management function includes oversight of risk function prevalent to its key operating group companies. The Company has a comprehensive Risk Management framework and overarching Risk Management Policy, which is adopted by each of the key operating subsidiaries while formulating their Risk Policy. Risk Management Policy of the Company identifies the key risk, if any, which may threaten the existence of the Company. Risk Management Policy is aimed at identification, evaluation/assessment, mitigation, monitoring and reporting of identifiable risks and recording of each identified risk alongwith their mitigation plan. Respective functional head and/or risk management department of key subsidiaries are responsible for implementation of the Risk Management system and maintenance of record of risk and mitigation plan in Risk & Control Matrix (RCM) for their respective functional area, which is tested and updated periodically. Therefore, the 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 identification of risks and their classification as High, Medium and Low categories on the basis of likelihood, impact and velocity.

The testing and evaluation of control environment around Risk Management is integrated with the internal audit conducted by the Internal Auditors. The Risk Management Committee of the Company and its key operating subsidiaries reviews the risk management policy on an annual basis. Further, adequacy of design and operating effectiveness of key processes and controls, as documented in the risk and control matrices, is tested by internal auditors and a consolidated dashboard of Risk and Control review results across the Company and it key operating subsidiaries is presented to the Risk Management Committee of your Company on periodic basis.

Therefore, the Company has implemented a formal risk management policy and framework. Financial reporting and fraud risks are duly considered in the risk management framework. Risks are mapped with controls and Risk management framework is revisited and revised on the basis of prevailing practice and relevance.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of unethical practices, fraud and mismanagement, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy and any leak/suspected leak of Unpublished Price Sensitive Information or gross misconduct by the employees of the Company, if any, that can lead to financial loss or reputational risk to the organization. The detail of the Whistle Blower Policy has been posted on the website of the Company & can be accessed through the link https://www.reliaare.com/ Policies.aspx

During the year under review, no complaint pertaining to the Company was received under the Whistle Blower mechanism. INTERNAL FINANCIAL CONTROLS AND INTERNAL CONTROL SYSTEM

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Controls of the company encompasses the policies, standard operating procedure manuals, approval/ authorization matrix, circulars/ guidelines, and risk & control matrices adopted by the company for ensuring the orderly and efficient conduct of its business & support functions, adherence to these policies & procedures, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information during the process of financial reporting.

The Company and its key operating subsidiaries have adequate control environment for identification and assessment of applicable risks on a periodical basis. Mitigation plans and controls are documented for each identified risk in the form of policies & procedures and risk & control matrices (RCM). Risks/controls documented in the risk and control matrices are mapped to each of the financial statement line items and financial assertions to ensure availability of mitigation plans and internal financial controls for each of the material balances contained in the financial statements. The Company has prepared separate RCMs for Process Level Controls (PLC) and Entity Level Controls (ELC). Similarly, IT General Controls (ITGC) have also been identified, assessed and documented.

The Company has satisfactory system of periodical monitoring and reporting of internal financial controls. Key policies and procedures including the Risk & Control Matrices are updated on a periodical basis. Management ensures that controls as designed are operating effectively and that lapses are identified and remedied in a timely manner. The monitoring activities are carried out through Control Self-Assessment (CSA) mechanism integrated with the internal audit function, conducted by Internal Auditor, whereby key risks and controls are reviewed on a quarterly basis and dashboard containing results of evaluation of Test of Design (TOD) and Test of Operating Effectiveness (TOE) are presented to the Audit Committee of the Company and its key operating subsidiaries. A half yearly report on TOD/TOE testing is presented to the Risk Management Committee.

The Company and its key operating subsidiaries have an elaborate quarterly internal audit system. The scope and authority of the Internal Audit function is defined in the comprehensive agreement with the internal auditor, which is reviewed and approved by the Audit Committee of the Company and its respective subsidiaries. To maintain its objectivity and independence, the Internal Auditor firm directly reports to the Audit Committee.

The Internal Auditor evaluates the efficacy and adequacy of the internal control system and internal financial controls (IFC) in the Company, its compliance with operating systems, accounting procedures, policies and regulatory requirements at key locations of the Company and its subsidiaries. Based on the integrated report of internal audit function and IFC, process owners undertake corrective action in their respective areas and thereby strengthen the internal controls. Significant internal audit observations and corrective actions thereon, alongwith IFC dashboard, are presented to the Audit Committee on quarterly basis.

Therefore, the Board has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the financial year.

DETAILS OF FRAUD REPORTABLE BY AUDITOR

During the year under review, neither the statutory auditors nor the secretarial auditors of the Company has disclosed any instance of fraud committed against the Company by its officers or employees required to be disclosed in terms of Section 143(12) of the Act.

HUMAN RESOURCES

The Company has successfully strengthened the overall position of the group and has created a blueprint to move ahead. The company and its subsidiaries are steadily restoring confidence amongst its various stakeholders. With the sincere efforts of dedicated, committed and loyal employees, the Company has stood strong even during difficult circumstances in the recent past and has made a strong presence felt across industry.

As we have paved our way to achieve greater heights, the Company continued to invest in creating a pool of talent for the growing business needs by way of retaining highly experienced and competent resources and by attracting new talent. Employees are the most important and critical asset and we are committed towards their overall development. We focus on promoting a collaborative, transparent and participative organization culture, and have developed strong performance management practices wherein innovation and meritocracy is recognized and rewarded. The Company also initiated various wellness initiatives to help employees in their physical and psychological well-being during the difficult times of COVID 19 Pandemic. Expert talks and sessions on various topics related to physical and mental health and fitness were organized. The Company is committed towards building encouraging work environment with a healthy work life balance.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place Prevention of Sexual Harassment at Workplace Policy in line with the requirements of The Sexual Harassment of Women at the Work Place (Prevention, Prohibition and Redressal) Act, 2013 and rules made thereunder. An Internal Complaints Committee (ICC) is in place as per the requirements of the said Act to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No case has been reported during the year under review.

PARTICULARS OF EMPLOYEES

The details required under Section 197(12) of the Act read with Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed as "Annexure B" to this report.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirm that, the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board, its Committees and the General Meetings.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its operations in future except to the extent mentioned in this Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

There are no material changes and commitments adversely affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate (i.e. March 31,2021) and as of date of the report i.e. August 12, 2021.

ACKNOWLEDGEMENTS

Your Directors would like to express their sincere appreciation for the co-operation and assistance received from the Company’s Bankers, Regulatory Bodies, Stakeholders including Financial Institutions and other business associates who have extended their valuable sustained support and encouragement during the year under review.

Your Directors also wish to place on record their deep sense of gratitude and appreciation for the commitment displayed by all executives, officers and staff at all levels of the Company during the year under review. Your Directors would also like to thank all shareholders for their continued faith in the Company and look forward to your continued support in the future.

By order of the Board of Directors
For Religare Enterprises Limited
Sd/-
Dr. Rashmi Saluja
Executive Chairperson
DIN:01715298
Place: New Delhi Address: Prius Global, A-3,4,5,
Date: August 12, 2021 Sector - 125, Noida - 201 301