Religare Enterprises Ltd Management Discussions.

1. MACROECONOMIC DEVELOPMENT & INDUSTRY OVERVIEW Macroeconomic Developments Growth of Indian Economy

The Indian economy contracted by 8.0% in Financial Year 2020-21 (FY21) due to adverse impact of COVID-19 pandemic and the related lockdowns imposed to restrict the spread of the disease. The full-year GDP de-growth was exceptional and GDP fall was greatest since 1979-80. The de-growth in India’s GDP was a massive 24.4% in Q1FY21 and 7.3% in Q2FY21. Amongst the large economies this was the highest de-growth witnessed in world over.

FY 2018 FY 2019 FY 2020 FY 2021
Real GDP Growth 6.8% 6.5% 4% (8.0)%
Real GVA Growth 6.2% 5.9% 4.1% (6.5)%

Source: Government of India, CSO. As per revised and provisional estimate available

However in second half of FY21 the economic activity picked up and several high frequency economic indicators showed that economic activity was back to pre-pandemic levels. Finally for the year, India’s GDP contracted by 8.0%, which was lesser than expectation after the Q1 FY21 GDP numbers were announced. Though International Monetary Fund (IMF) has forecasted India’s GDP to grow between 11.5% to 12.5% in FY22 but post the second wave of COVID-19 pandemic in India, Moody’s latest forecast of 9.5% GDP growth looks more realistic.

Impact of COVID-19

The unprecedented pandemic crisis of COVID-19 and resultant lockdowns has given a massive shock to economies world over. The Indian economy was negatively impacted by an unprecedented health crisis in 2020-21 with the highly contagious COVID-19 spreading across the country. In response to the pandemic, Government has taken several proactive preventive and mitigating measures starting with progressive tightening of international travel, issue of advisories for the members of the public, setting up quarantine facilities, contact tracing of persons infected by the virus and various social distancing measures. In India nationwide lockdowns resulted in massive GDP contraction in first quarter of FY21. However by the end of second quarter of FY21 a lot of economic activity has normalized and in many sectors economic activity has reached upto 90% of pre-Covid level.

Macroeconomic Outlook

Economic conditions shall remain mixed in FY22, considering that disastrous second wave in Q1FY22 already adversely affected economic activity, especially in services and financial sector and the threat of potential third wave is also a looming danger on economic growth. Though after initial hiccups India’s vaccination programme has gathered more pace and country has already crossed milestone of delivering 50 crores vaccine dosage, continued momentum of vaccination drive and adequate attention on controlling the spread of disease will be critical to protect the economy from potential lockdowns from a future surges of COVID-19 pandemic. While systemic liquidity is abundant, the economic weakness caused by the pandemic and its effects on labour market, will impact banking sector loan growth, revenues, margins, asset quality and credit costs The Government of India (GOI) has also announced special economic and comprehensive packages under Atmanirbhar Bharat to fight the COVID-19 pandemic in India. Several structural reforms announced include change in definition of MSMEs, new PSU policy, commercialization of coal mining, higher FDI limits in defense and space sector, development of Industrial Land/ Land Bank and Industrial Information System, Production Linked Incentive Schemes, revamp of Viability Gap funding scheme for social infrastructure, new power tariff policy and incentivizing states to undertake sector reforms.. Strong growth in Technology, Metals, Infrastructure, Chemicals and Exports etc, is expected to continue and this shall contribute to support other consumption based sectors.

Industry Overview- Financial Services

NBFC Sector

Non-Banking Financial Companies (NBFCs) play a critical role in financial intermediation and promoting inclusive growth by providing last-mile access of financial services to meet the diversified financial needs of less-banked customers. NBFCs have also been a significant source of credit to the Micro, Small and Medium Enterprises (MSMEs) sector, which accounts for about 29% of India’s GDP. Over the years, the segment has grown rapidly and NBFCs are leveraging technology to adopt tech-based innovative business models. Automation and Digitalization has accelerated reinvention of financial products. New age technologies and strategic partnerships with Fin-Techs have also allowed NBFCs to lower the cost of operations and acquire new customer rapidly.

The aftermath of liquidity stress post IL&FS and DHFL resulted in difficult market conditions for NBFCs with respect to raising liabilities. While NBFCs with better asset quality and robust business models managed to come out stronger, the smaller NBFCs and Microfinance Institutions (MFIs), which contributed to the last mile credit delivery, got impacted adversely due to liquidity squeeze. As the sector was slowly normalizing, the outbreak of COVID-19 and disruptions in economic activity due to lockdowns again led to stress in financial system and the impacted NBFCs severely, straining their profitability.

Banks are a key source of credit for NBFCs. The Reserve Bank of India’s (RBI) regulations have incentivized the flow of credit from banks to NBFCs by making on-lending by NBFCs to certain specific sectors, eligible for classification as priority sector lending. The reliance of NBFCs on market-based instruments, like Corporate Bonds and Commercial Paper (CPs), to meet their financing needs, has also grown and better performing NBFCs find easier access to market financing.

Impact of COVID19 and Lockdown on financial sector

The lockdown has affected the cash flow and liquidity position of many borrowers (individuals, small businesses and corporates), impacting their debt-servicing capabilities. The impact would be more prominent in the case of self-employed borrowers, the daily wage workforce, and small businesses (non-essentials). Non-banks largely cater to the self-employed borrower segment in retail space, where the cash flows are expected to be more volatile in the current situation vis-a-vis their salaried counterparts.

NBFCs, which are already facing funding constraints and an expected increase in delinquencies, are likely to focus more on collections, at least in the near term. Therefore, the lack of supplementary credit funding could have a significant negative impact on these borrowers as their cash flow mismatches would compound with the passage of time. Deterioration in the asset quality could further stifle the fund flow to the sector as bank credit to the sector is already high and funding from other sources like mutual funds (MFs), insurance, foreign institutional investor (FIIs), etc., are likely to be quite muted

Financial sector measures:

To get the economy moving, the Government of India and Reserve Bank of India announced various measures including policy changes, reforms, relief packages, bank loans, and infrastructure building plans and so on. The Ministry of Finance and RBI also announced a list of measures to boost the economy and provide relief to the businesses which included:

• RBI had announced 6 months EMI moratorium for the period March 2020 - August 2020 vide its guidelines dated March 27, 2020, April 17, 2020 and May 23, 2020.

• Emergency Credit Line Guarantee Scheme (ECLGS) - The scheme was announced by Central Government as part of COVID-19 relief package by providing 100% guarantee to members lending institutions on the loan extended by them to the eligible borrowers.

• Resolution Framework for COVID-19 related stress - to provide the sectors a relief by way of onetime restructuring which were facing any financial stress on August 06, 2020.

• MSME restructuring 2020 - To provide one-time relief by restructuring of MSMEs accounts having aggregate exposure of upto Rs. 25 crores in August 2020.

• Ex-Gratia Payment Scheme - To grant ex-gratia payment of difference between compound interest and simple interest for six months (01 March 2020 to 31 August 2020) to eligible borrowers vide RBI circular dated October 26, 2020.

• Interest on Interest Refund - In line with the Hon’ble Supreme Court of India judgement on March 23, 2021, RBI vide its circular dated April 07, 2021 advised to refund the interest on interest charged during the moratorium period.

• Resolution Framework Resolution Framework 2.0 - Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs) - To extend one-time restructuring relief to MSMEs having aggregate exposure of upto Rs. 50 crores impacted by COVID-19.

Measures undertaken by the RBI may considerably ease the stress in financial market conditions; Gradual economic recovery and adequate provisioning by financial institutions towards deterioration in portfolio credit quality should gradually restore more confidence in financial sector and NBFC sector in particular.


Reliaare Group Structure and Business Model

Religare Enterprises Limited (‘REL’ or ‘Company’) is a Core Investment Company (CIC) registered with the Reserve Bank of India (RBI). REL is also the listed holding company for the subsidiaries conducting diversified financial services businesses of the group. The four key financial services businesses undertaken through its subsidiaries are as following:

s Insurance (Health) - Care Health Insurance Limited (CHIL) s SME Finance NBFC - Religare Finvest Limiited (RFL)

s Housing Finance (Affordable) - Religare Housing Development Finance Corporation Limited (RHDFCL) s Retail Broking -Religare Broking Limited (RBL)

All these Religare Group (REL & subsidiaries) businesses have independent management teams to conduct their day-to-day operations. REL supports its subsidiaries by providing requisite Growth Capital, Board Oversight & Governance, Brand Equity, Strategic Advisory & Consulting and need based Corporate Services (Legal, Technology, HR, etc.). The Religare Group has access to a wide reach of customers - 1 million+ policy holders in insurance business, 1 million+ broking customers, more than 26k+ customer served through MSME finance & 10k+ customers contacts in affordable housing finance. As on March 31, 2021 Group has overall employee base of more 11,000 professionals servicing diversified set of customers and Group has reach to around 1,000+ locations around India.

Key Developments:

Capital Raise by REL and Subsidiary Level

Preferential Issue of Rs 570 crores by REL: The Company raised Rs. 570 crore by way of Preferential allotment of 5,41,56,761 equity shares of REL on July 14, 2021 at an issue price of Rs. 105.25 per share (including a premium of Rs. 95.25 per share) to some existing shareholders and new investors, as per the terms of SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2018. The Company intends to invest majority of these funds in its subsidiaries, towards growth and revival of various financial services businesses conducted by its subsidiaries.

CHIL Stake Sale to Kedaara Capital: REL and its subsidiary, Care Health Insurance Limited (CHIL) entered into the definitive agreement (Share Subscription and Purchase Agreement) on February 06, 2020 with M/s. Kedaara Capital Fund II LLP and M/s. Trishikhar Ventures LLP (jointly referred as ‘Kedaara’) for raising primary capital for CHIL and part divestment of REL’s stake in CHIL. Pursuant to same, REL has divested part of its investment in CHIL on June 02, 2020 to Kedaara. The total investment made by Kedaara to acquire shares of CHIL is Rs 567.31 crore, which comprises of primary capital infusion of Rs 300 crore in CHIL and Rs 267.31 crore for the purchase of its shares from existing shareholders of CHIL, including purchase of 6.39% stake from the REL against a consideration of Rs 200 crore.

Re-classification of Erstwhile Promoters as public shareholders

On Company’s application, submitted on July 31, 2020 to stock exchanges, for re-classification of Promoters and Promoters Group, the stock exchanges viz. National Stock Exchange of India Limited (NSEL) and Bombay Stock Exchange Limited (BSEL) gave their approval on June 11, 2021 and June 12, 2021 respectively for reclassification of following Promoters & Promoter Group into public category:

Promoters (Erstwhile now)

1. Malvinder Mohan Singh

2. Shivinder Mohan Singh Promoters Group (Erstwhile now)

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)

The Erstwhile Promoters & Promoter Group held combined equity shareholding of 0.31% of total equity shares of the Company as on March 31,2021. Pursuant to the Re-classification of Promoters / Promoters Group (Erstwhile now), the Company has now become a "Listed entity with no Promoters".

Revival efforts of Religare Finvest Limited

The Reserve Bank of India (RBI) vide its letter dated January 18, 2018, advised Religare Finvest Limited (RFL) to adhere to Corrective Action Plan (RBI CAP), which inter-alia prohibits RFL from expansion of credit / investment portfolios other than investment in government securities and advised RFL to not pay any dividends. RFL’s new Board and Management have been taking necessary corrective measures as advised by the RBI and is making concerted efforts towards the revival of RFL. 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 June 3, 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. BP.BC. 45 /21.04.048 /2018-2019) and the same is 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 one of the pre-condition of the proposed DRP.

Settlement with Axis Bank Limited:

Axis Bank filed a legal case in Hon’ble Debt Recovery Tribunal, New Delhi (DRT) against the Company and its subsidiaries, Religare Capital Markets Ltd (RCML) and Religare Capital Markets International (Mauritius) Limited (RCMIML) amongst other, for recovery of Rs 312.93 crore in relation to a Credit Facility obtained by RCMIML from Axis Bank. While the Company had not provided any guarantee/securities in relation to the aforesaid Facility, Company had executed a Non Disposal Undertaking (NDU) in favour of Axis Bank, with regard to its equity shareholding in CHIL. The Hon’ble DRT had passed interim restraint orders dated 21.03.2018 and 26.08.2019, against the Company amongst others, restricting it from sale of any assets. In view of same the Company settled the dispute with Axis Bank by paying a total settlement amount of Rs 170 crore, in tranches (Rs 17 crore in FY20 and Rs 153 crore in June 2020) and pursuant to this settlement the Hon’ble DRT vide its order dated July 13, 2020 has deleted REL, RCML and RCMIML from the list of parties and vacated interim restraints orders passed earlier.

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 on standalone basis. 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 135.87 crore (as March 31,2020: Rs 24.5 crore) 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. 8.76 crore 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 FY22. Similarly, RHDFCL has computed an amount of Rs 66.9 Lakh to be refunded / adjusted in accounts of the borrowers.


The table below lists the key subsidiaries with operations as at March 31, 2021 :

Company Status REL’s Stake Major Area(s) of Operation
Religare Finvest Limited (RFL) Subsidiary 100% • SME Finance
Religare Housing Development Finance Corporation Limited (RHDFC) Step down subsidiary (held through RFL) 87.5% Affordable Housing Finance
Health Insurance
Care Health Insurance Limited (CHIL) Subsidiary 70.71% Health insurance & related products
Religare Broking Limited (RBL) Subsidiary 100% Retail Broking Depository & E-Gov. Services

SME Finance NBFC - Reliaare Finvest Limited (RFL)

Religare Finvest Limited (RFL), is a wholly owned subsidiary of REL registered with RBI as a non-deposit taking, systemically important Non-Banking Financial Company (NBFC-ND-SI). RFL’s business is focused on providing debt capital to Small & Medium Enterprises (SMEs) to enable them to enhance their productive capacity and throughput. It is amongst the first NBFCs in India to focus on this segment, having started the business in 2008 and by 2016, RFL had grown to build a peak business book of over Rs 16,000 crore to become one of the largest SME financing platforms in India. Currently, RFL has an employee base of over 300 and it has 19 branches pan India. RFL’s product offerings comprise of:

a) SME-Secured: RFL’s SME-Secured product enables its customers to obtain loans against their residential or commercial property. Loans offered under this product may be utilized towards different purposes including business expansion and purchase of plant and machinery.

b) SME-Unsecured: This product caters to working capital and other financial requirements of small and medium enterprises, self-employed businessmen and professionals. Loans are granted after an in-depth and detailed financial analysis and credit underwriting of the clients.

c) Short Term Trade Finance: This product empowers our customers to bridge their short term financial gaps. Our short term trade finance gives freedom to SMEs to avail financing against purchase payables.

RBI Cap and Revival efforts:

The Reserve Bank of India (RBI) vide its letter dated January 18, 2018, advised RFL to adhere to Corrective Action Plan (RBI CAP), which inter-alia prohibits RFL from expansion of credit / investment portfolios other than investment in government securities and advised RFL to not pay any dividends. The past wrongdoings of the erstwhile promoter group and ex-management resulted in siphoning of Rs 2,037 crore through Corporate Loan Book (CLB) transactions, which came to light through forensic audits, various RBI reports and SEBI investigations. The other financial challenges faced by RFL, include misappropriation of Rs 791 crore of RFL’s Fixed Deposit by Laxmi Vilas Bank (LVB) and other non-core (non SME) investments done by RFL’s ex-management, which resulted in losses for the company.

RFL’s new Board and Management have been taking necessary corrective measures as advised by the RBI and is making concerted efforts towards the revival of the company. Forensic audits, filing of legal proceedings for recovery of CLB funds, submission of criminal complaints & evidences to investigating agencies, expediting collections & recovery efforts, sale of NPA’s to Asset Reconstruction Companies (ARCs), resolving other legacy issues and putting in place systems & controls for responsible corporate governance are some of the key steps being taken towards revival of RFL in last 3 years. Despite being under RBI CAP, RFL has repaid more than Rs 6,890 crore to its lenders since January 2018 to March 31,2021.

During the year ended March 31,2021, RFL has submitted revised Debt Restructuring Plan (DRP) to the lenders 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. BP.BC. 45 /21.04.048 /2018-2019) and the same is 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.

Operational Performance

RFL’s total loan book size was Rs 4,873 crore as on March 31, 2021, decreased from Rs 5,306 as on March 31, 2020. SME book constituted 48% of total book and amounted to Rs 2,343 crore. The Total income earned during the year was Rs 295.5 crore, declined by 32% from the last financial year. RFL’s net NPAs stood at 38% of total book size and Capital to Risk Assets Ratio (CRAR) as on March 31,2020 was -78.3 %. Being under RBI CAP, RFL has focused its efforts on collections, recovery and correcting the asset liability mismatch in its books. 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. 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.

RFL- SME Secured Lending:

As on March 31,2021, RFL’s SME-Secured loan book was at Rs 2,340 crore with 1,663 no. of active accounts SME Secured Book Size YoY

SME-Unsecured Lending

As on March 31,2021, RFL’s SME working capital loan book stood at Rs 3 crore with 299 no. of active accounts SME Unsecured Book Size YoY

Threats /Risks: The second wave of the COVID 19 pandemic has impacted the economic recovery which was severely impacted and crippled during the first wave of the pandemic. Most MSMEs of India in pre-COVID-19 times were known to carry out their operations solely through a brick and mortar model, which is known to limit the outreach to their geographical location, and also productivity. While MSMEs in India can produce goods of a good standard, lack of access to global value chains hinders their ability to increase their revenue and set off the virtuous cycle of growth as mentioned earlier. Some of the other potential threats are as below:

• Outbreak of the pandemic COVID-19 across the world has impacted all industries and most specific the MSME industry.

• High cost of funds

• Rising NPAs across the industry

• Continued lockdown

• Resurgence of COVID via third wave and other delta variants

Opportunities : The New to Credit customer provides a vast opportunity for the NBFCs. Since NBFCs by nature are nimble, agile and bring both flexibility and speed of processing they will be quick in onboarding new customers. ‘Co-lending’ is an opportunity wherein NBFCs can provide financing to the underserved priority sectors. Co Lending helps in sharing the risks and rewards and make available funds to the ultimate beneficiary at an affordable cost, considering the lower cost of funds from banks and greater reach of the NBFC. In the budget amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, the loan threshold limit for applicability of SARFAESI provision to NBFC was further brought down to Rs 20 Lacs from the earlier limit of Rs 50 Lacs. Reducing the amount for taking SARFAESI action will provide NBFCs better access to fast track and out of court enforcement mechanism, which would lead to better discipline in the financing world.

Housing Finance - Reliaare Housing Development Finance Corporation Limited (RHDFCL) Religare Housing Development Finance Corporation Limited (RHDFCL), a step down subsidiary of REL in which REL holds 87.5% equity stake through RFL, offers residential collateral backed mortgage loans for home purchase, construction, extension & renovation along with loan against residential property to customers both formal & informal income segment essentially belonging to the low & medium income groups. RHDFCL is registered Housing Finance Company (Non-deposit taking) with a SARFAESI License. RHDFCL operates through 26 branches and has a diversified geographical presence across Delhi NCR, Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Tamil Nadu, Karnataka, Telangana and Andhra Pradesh. RHDFCL has remained profitable in each year of its operations since it became a part of the Religare group in year 2009.

RHDFCL envisions itself to be a future ready company and hence it aims to maximize digitization in its processes and work towards enabling an efficient workforce. RHDFCL is increasingly using analytics and big data to better understand inventory, migration and pricing trends. The ability to assess the credit worthiness of potential borrowers is crucial for succeeding in this segment; robust credit assessment processes position RHDFCL extremely well to capitalize on this opportunity. Customer centricity has also been a forefront vision of the company and company is following ‘Closer to Customer’ strategy to have a better outreach to the customers.

Operational Performance

As on March 31,2021, RHDFCL’s loan book size was Rs 457 crore with 100% of collateral as residential properties and 97% funding to retail borrowers. Out of the total book size, 68.3% of the lending has been for Home Loans, 28.3% for Loan against Property (LAP) and 3.4% towards builder funding. The total loan book size has reduced from Rs 603 crore as on March 31, 2020. The reduction in the book was primarily due to constraints faced by RHDFCL in raising more funds or liabilities from its lenders on account of financial stress faced by its parent company, RFL. The Total Income and PAT after OCI for the financial year were respectively Rs 82.5 crore and Rs 9.1 crore. The average ticket size for the home loans has been around Rs 11.4 lakh. RDHFCL maintained a CRAR of 67.7% as on March 31, 2021. The Gross NPA and Net NPA ratio were respectively 10.7% and 5.7% of the total assets. RHDFCL is working with its lenders towards mobilization of borrowings, since from an equity and regulatory capital perspective RHDFCL is very well capitalized with high CRAR of 67.7%. RHDFCL sales and distribution, risk management, operations functions are adequately robust to scale up lending operations in a prudent manner.

Insurance (Health & Travel) - Care Health Insurance Limited (CHIL)

CHIL, 70.7 % held by REL as on March 31, 2021, ranks number 2 in terms of GDP amongst the Stand Alone Health Insurance Companies (SAHI). CHIL commenced business in 2012 and has a network presence at 1,200+ locations across country with 158 branches and 16,000+ hospitals and healthcare centres empaneled for cashless claims. It has a product bouquet of 25 products encompassing group, travel, fixed benefit and indemnity categories to serve varied customer needs. CHIL has a differentiated service offering for corporate businesses, like wellness programs & preventive health check-up, thereby helping in negotiating higher premiums & improves customer stickiness. It follows a multi-channel distribution strategy through agency, brokers, corporate agents, online and bancassurance and its major focus is on retail and SME customers. CHIL continuedto invest in Digital properties for its customers, partners and its employees.

Operational Performance

During the FY21, CHIL garnered Gross Written Premium of Rs 2,588 crore (which represented a growth of 30% from FY20 on granular/regular business - i.e. excluding onetime Gross Premium of Rs 413 crore under Ayushman Bharat scheme of a particular state from overall Gross Written Premium of Rs 2,409 crore achieved by CHIL in FY20). CHIL reported PBT of Rs 75.5 crore and PAT of Rs 102 crore in FY21. As on March 31,2021 CHIL had a networth of Rs 1,037 crore. In June 2020, Kedaara Capital invested a primary capital of Rs 300 crore in CHIL along with investment in secondary purchase of CHIL shares. This capital infusion has helped the company to make investments in distribution, technology, servicing opportunities and building healthy solvency margins. CHIL is continuously monitoring the impact of pandemic on the business operations.

Threats / Risks: IRDAI has instructed that COVID-19 claims will also be accepted as part of active health insurance policies. The Risks for COVID-19 were not factored in while at the time of issuance of earlier policies, hence additional claims related to COVID-19 may impact profitability of Health Insurance companies. Also some studies have shown that COVID-19 affects the co-morbidities such as diabetes, renal or other chronic diseases and this can result in longer trail of non COVID chronic claims for a for extended period beyond COVID-19 crisis.

Opportunities: Indian health insurance market is a growing market and registered a market size of Rs 56,798 crore in FY20, up by 11.6% from last year. Out of all health insurance service providers in India, Public Sector institutions have a market share of 46% and Private Insurers having a market share of 29% and Stand Alone Health Insurance Companies (SAHI) hold 25% market share. However in terms of retail Gross Written Premium (GWP), SAHI had the biggest share of 50% in FY20. The group believes that having invested in people, processes, alliances, technology and customer services, CHIL is well placed to serve and grow in the structural growth story of insurance sector in India and specially health insurance sector. Further the onset of COVID-19 has increased awareness towards need of Health Insurance products and this may result in additional demand for health product for next few years.

Retail Broking -Religare Broking Limited (RBL)

The Retail Broking business is primarily undertaken by Religare Broking Limited (RBL), a wholly owned subsidiary of REL. RBL provides trading capabilities across all product segments - cash equities, equity derivatives, commodities, currency derivatives, and mutual funds; on all major stock and commodities exchanges in India. RBL has more than 900 points of presence spanning 400+ towns and cities across the length and breadth of India and it services more than 1 million unique customers. RBL’s distribution strategy entails a judicious combination of its own branches and a strong network of sub-brokers and franchisees that help extend RBL’s presence and make the Religare brand visible in the far corners of India. RBL provides multi-platform options for trading such as Branch, Web, mobile App, Call & Trade to enhance customer convenience and ease. The Retail Broking business also has Bancinvest partnerships with various banks like Andhra Bank, Bank of Maharashtra, Corporation Bank, Dhanlaxmi Bank Limited, IndusInd Bank Limited, Karur Vysya Bank Limited, Sarasvat Bank, South Indian Bank Limited, Tamilnadu Mercantile Bank Limited, UCO Bank and Union Bank of India etc. Under the Broking Business the following key segments operate:

• Retail Equity Broking: The retail equity broking business is operated by RBL. RBL is registered as a Stock and commodity Broker with Securities and Exchange Board of India (SEBI). RBL is a also member of the National Stock Exchange of India Limited (NSE), Bombay Stock Exchange Limited (BSE), Metropolitan Stock Exchange Limited of India Limited (MSE), National Commodity & Derivatives Exchange Ltd. (NCDEX) and Multi Commodity Exchange of India Ltd. (MCX). In addition, RBL is a depository participant with National Security Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), which facilitates smooth settlement of client’s delivery-based transactions.

• Retail Commodity Broking: Commodity Broking provides platform for Exchange-based trading of futures in various agricultural products, bullion, metals and oil & gas provides producers, end-users and intermediaries who are exposed to price risks in these commodities, to lock-in future prices and thereby hedge their exposures. RBL is a member of National Commodity & Derivatives Exchange Ltd. (NCDEX), Multi Commodity Exchange of India Ltd.

• Retail Currency Broking: Trading in currency futures and options allows clients to hedge the capital and trading exposures they may have in currencies other than the Indian rupee. These products are offered by RBL as a member of the currency segment on NSE, BSE and MSEI. Currently, the exchanges permit futures trading in four currency pairs, viz. US dollar-Indian rupee, Euro-Indian rupee, Pound Sterling-Indian rupee and Japanese yen-Indian rupee, and options trading in the US dollar-Indian rupee pair.

• Ancillary Services: RBL is also a TIN (Tax Information Network) and PAN (Income Tax Permanent Account Number) facilitation partner of NSDL and offers services relating to PAN, TAN (Tax Deduction and Collection Account Number), and filing of TDS/TCS (Tax Deduction at Source/Tax Collection at Source) returns at select branches, to help its customers fulfill their major financial services needs under a single roof. RBL is also empaneled with E-mudra as Registering Authority/ Agent for issuance of Digital Signature Certificate and is an AMFI registered mutual fund distributor. RBL is also registered as Point of Presence (POP) with Pension Fund Regulatory Development Authority (‘PFRDA’) under PFRDA Point of Presence Regulations, 2015 and with Insurance Regulation & Development Authority as a composite corporate agent to distribute insurance products.

Operational Performance

RBL reported total consolidated revenue of Rs 244.5 crore in FY21, compared to Rs 220 crore of revenue achieved in FY20. RBL turned profitable in FY21, achieving a PAT of Rs 10.5 crore in FY21 in comparison to PAT loss of Rs 21.4 crore in FY20. The Average Daily Trading Turnover for the company increased by 23 % in FY21. The E-Governance business of RBL increased its franchise significantly from around 2,635 to 5,983 franchise touchpoints.

Threats/ Risk: A continued slowdown in real economy may result in pessimism towards capital markets. There is high amount of liquidity in markets due to monetary and fiscal easing by Central Banks globally and reversal of this phenomenon may impact market adversely. However, the penetration of Capital Markets in India is still low and it leaves a lot of scope to structural growth of markets. Further Broking business is seeing a lot of discount Brokers offering very low or negligible brokerage impacting profitability. RBL is adapting its products; technology and service experience to increase its volumes and mitigated this risk.

Opportunities: The revival in market sentiments is expected to give push to the primary market activities and overall volumes. The commodities market has adjusted well to the new regulatory regime. After few years of hiatus due to systemic issues of the past, the regulator has proposed the introduction of new products and new participants in the market. As these efforts come to fruition, the commodities market will be well positioned to enter a new phase of growth


The highlights of standalone and consolidated financial performance of the Company in FY21 are as under:

(Rs in Crs)


Financial Year 2020-21

Financial Year 2019-20

Standalone Consolidated Standalone Consolidated
(Audited) (Audited) (Audited) (Audited)
Total Income 118.78 2530.47 60.59 2397.48
Total Expenditure 54.43 3027.85 200.75 3257.46
Profit before Tax 64.35 (497.38) (140.16) (859.98)
Exceptional Items - - (170.00) (170.00)
Profit/(Loss) before Tax after exceptional items 64.35 (497.38) (310.16) (1029.98)
Share in Profit / (Loss) of Joint Ventures - (0.08) - (0.13)
Profit/(Loss) Before Tax 64.35 (497.46) (310.16) (1030.12)
Income tax Expense/ (Credit) 0.35 (19.64) - 7.86
Profit/(loss) After Tax 64.00 (477.82) (310.16) (1037.98)
Other Comprehensive Income 0.42 28.69 (0.52) 13.84
Total Comprehensive Income for the period 64.41 (449.13) (310.68) (1024.14)
Less: Share of Non- Controlling Interest 0.00 37.76 0.00 (103.57)
Total Comprehensive Income/(Loss) (after tax & non-controlling interest) 64.41 (486.89) (310.68) (920.56)

Consolidated Performance

REL recorded a ‘Loss after Exceptional Items and Before Tax’ of Rs 497.38 crore, for FY21 as compared to ‘Loss after Exceptional Items and Before Tax’ of Rs. 1,029.98 crore, for FY20. ‘Loss After Tax and Share in profit/loss of Joint Venture’ was Rs 477.82 crore for FY21 as compared to ‘Loss After Tax and Share in profit/loss of Joint Venture’ of Rs. 1,037.98 crore for FY20. Total Comprehensive Income/(Loss) attributable to the Owner of the Company for the FY21 was Rs (486.89) crore as compared to Rs. (920.56) crore in FY20. Basic Earnings per Share was Rs. (19.65) in FY21 compared to Rs. (39.55) in FY20.

Standalone Performance

REL recorded a ‘Profit After Exceptional Items and Before Tax’ of Rs. 64.35 crore, for FY21 as compared to ‘Loss After Exceptional Items and Before Tax’ of Rs. 310.16 crore, for FY20. ‘Profit after Tax’ was Rs. 64 crore for FY21 as compared to ‘Loss After Tax’ of Rs. 310.16 crore for FY20. Total Comprehensive Income/(Loss) for the FY21 was Rs. 64.41 crore, compared to Rs. (310.68) crore for the FY20. Basic earnings per share Increased to Rs. 2.47 in FY21 from Rs. (13.16) in FY20.

Segment-wise Performance (Consolidated)

Our income from operations is comprised of income from lending activities, insurance premium, broking operations, interest from fixed deposits with banks, income from non-current investments, income from current investments, interest from delayed payments, profit on assignment of loans, income from advisory services, investment management and advisory fees and income from arbitrage and trading of securities and derivatives. A comparison of the income from our operations in FY21 and in FY20 is tabulated below:


As per Ind AS


FY 20

Amount % of Total income Amount % of Total income
Income From Lending Activities 341.13 13.48% 479.55 20.00%
Interest Income on Fixed Deposits with Banks 19.86 0.78% 16.91 0.71%
Interest Income/Charges on Delayed Payments 11.51 0.45% 23.82 0.99%
Income from Investments 169.99 6.72% 119.14 4.97%
Commission Income 7.02 0.28% 34.05 1.42%
Income From Broking Operations 204.85 8.10% 167.96 7.01%
Income From Advisory Services - 0.11 0.00%
Net Income From Insurance Premium 1729.47 68.35% 1,507.79 62.89%
Other Business Income 2.94 0.12% 6.03 0.25%
Total Revenue From Operations 2486.77 98.27% 2,355.36 98.24%
Other Income 43.70 1.73% 42.12 1.76%
Total Income 2530.47 100.00% 2,397.48 100.00%

Details of Other Income (Consolidated):

Other income primarily includes balances written back/bad debts and loans written off recovered, profit on sale/ redemption of Investments, interest income on loans and fixed deposits with banks, etc. Contribution of other income of Rs 43.70 crore, out of total income decreased to 1.73 % as compared 1.76% in FY20. Below is a comparison of the components of our other income during FY21 with that in FY20:

(Rs in Crore)

Particulars FY 21 FY20
Balances Written Back /Bad Debts and Loans Written off Recovered 3.06 1.85
Income From Support Services 0.01 0.67
Interest Income From Fixed Deposits With Banks* 0.07 0. 22
Net Gain on de-recognition of Property, Plant and Equipment 0.36 0.84
Profit on Sale/Redemption of Investments (Net) 0.15 5.26
Interest Income From Investments 5.46 5.83
Interest Income on Others 20.40 16.63
Income towards ARC transaction (Net) 4.23 5.50
Miscellaneous Income 9.96 5.32
Total Other Income 43.70 42.12
Key Ratios (Consolidated level): (Rs in Crore)
Particulars FY 21 FY 20
Total Income 2,530.47 2,397.48
EBITDA 286.39 50.12
EBITDA Margin % 11% 2%
PBT (497.46) (1,030.12)
PBT Margin % (20%) (43%)
PAT (477.82) (1,037.98)
PAT Margin % (19%) (43%)
Particulars FY 21 FY 20
Current Ratio 0.53 0.65
Debt Equity Ratio 16.42 27.57
Return on Networth * (160%) (534%)

The companys profitability ratios have improved on both standalone and consolidated levels. EBIDTA Margin /PBT Margin / PAT Margin have improved due to improved profitability in all key subsidiary businesses and reduced loss at RFL. PAT have increased in CHIL to Rs 102 crore in FY21 from Rs 75.5 crore in FY20, RBL had PAT of Rs 10.5 crore in FY21 compared to loss of Rs 21.4 crore in FY20, RDHFCL achieved a PAT of Rs 9.1 crore in FY21 in comparison to PAT of Rs 4.9 crore in FY20 and RFLs loss has reduced to Rs 575.4 crore in FY21 in comparison to loss of Rs 896.8 crore in FY20. REL also realized PAT of Rs 64 crore in FY 21 in comparison to loss Rs 310.16 crore in FY20, primarily due to profit from sale of secondary stake of 6.39% in CHIL in FY21 and reduction on costs. The improved profitability during year also resulted in improvement of debt /equity ratio to 16.42 in FY21 from 27.57 in FY20 and improvement of Return on Networth ratio which was negative 160% in FY21 in comparison to negative 534% in FY20.


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 subsidiaries have been operating in challenging times. However, in continuation to our dedicated efforts towards rebuilding the Group, we have seen a lot of tangible and positive developments in the Company: increased corporate governance and controls, improvement in systems and processes including cost rationalization, enhanced engagement with regulators and retention of critical talent.

As the transition of the Company in to this new phase continues, our management and employees are strongly aligned towards building an enabling eco-system to restore high growth and profitability. Employees are our vital and most valuable assets. In line with the business strategy, talent strategy has been focused on employee engagement, providing role elevation opportunities to existing talent and developing a strong culture of transparency through constant employee communication. In order to boost the employee morale, the organization has recognized the commitment, loyalty and contribution of its internal stakeholders. The Company is dedicated to offering its employees favorable work environment and opportunities to navigate through the current period and also influence its future course of direction as planned.

At Religare Group, Business and Human Resource teams are continuously striving towards achieving business objectives, dealing with exceptional adversities, ensuring adherence to established human resource processes and policies, maintaining credible communication with employees, to reinforce the professional value system and transparent work culture of the Group.