religare enterprises ltd Management discussions

1. MANAGEMENT DISCUSSION AND ANALYSIS Growth of the Indian Economy

The Indian economy expanded by 8.7% during the year ending March 2022. The GDP expanded by 4.1% in the March quarter from a year earlier. After declining 6.6% during the previous year, the robust GDP growth for 2021-22 bodes well for the economy and conclusively establishes its recovery above the pre-pandemic levels.

While the economies globally were coming out of the pandemic related shocks, the unprecedented rise in the commodity and oil prices coupled with heightened geo-political tensions in different regions during the later part of the year posed significant challenges for the world economies.

Despite these hurdles, India?s GDP expanded favourably in 2021-22. With the real GDP growth of 8.7% for FY22, most of the sectors are already above their pre-Covid levels. With the exception of lodging and transportation, all other sectors expanded positively surpassing previous highs, demonstrating that the Indian economy is past the Covid shock.

India?s banking and financial services industry is firmly in better shape to support the growth during this decade.

Impact of the second wave of COVID-19

Data on household income, domestic demand and informal job sector indicates that the second wave left a disastrous effect on India?s economy, particularly on the poorest population and smaller firms. Apart from medical emergency, certain sections of the economy also underwent economic challenges which were unprecedented in nature.

The Government of India took numerous extraordinary measures to contain the negative impact of the second wave on the economy. Specific allocations to build the medical support infrastructure, food security to the poorer sections and fiscal support to severely impacted economic sectors was another highlight of well-balanced response from Government of India.

The total amount allocated to credit guarantee schemes, including those previously announced, was increased from 3 lakh crore to 4.5 lakh crore. The programs promoting employment creation were also extended till the end of FY22. Other measures including encouraging exports and production-linked incentive (PLI) programme for various sectors also helped increase private sector participation.

Macroeconomic Outlook

According to the RBI?s projections, the Indian economy will expand at a rate of 7.2% in FY23. Despite the concerns around falling currency exchange rate against the USD, hardening interest rates, high inflation and spiralling oil and commodity prices, the Indian economy has demonstrated its ability to bounce back and expand led by domestic consumption.

Despite being a net importer of oil, which causes a trade imbalance, rupee has outperformed among other emerging economies currencies. Even on the trade deficit front, India has performed well and its foreign exchange reserves have expanded, providing it the ability to cushion global economic shocks.

Industry Overview- Financial Services

India?s banking and financial services sector has performed remarkably well, enabling a record amount of risk capital to be mobilised by Indian enterprises. The banking industry is well-capitalised, and NPAs appear to be declining structurally. Since 2018-19, Scheduled Commercial Banks (SCBs) have seen a drop across their Gross Non-Performing Advances (GNPA) ratio and Net Non-Performing Advances (NNPA) ratio. The GNPA ratio for SCBs dropped from 7.5% at the end of September 2020 to below 6.9% by the end of FY22.

Non-banking Finance Companies (NBFCs) continue to play crucial role in financial intermediation and encouraging inclusive growth. The Micro, Small, and Medium-Sized Enterprises (MSMEs) sector, which contributes around 27% of India?s GDP, has also significantly benefited from financing provided by NBFCs. NBFCs are utilising cutting edge technologies to implement tech-based business strategies and solutions. Financial product innovation has been spurred by automation and digitisation. Modern technologies and smart alliances at fintech firms have also reduced operating costs and sped up customer acquisition for NBFCs.

The slow pace of private investment recovery has been more than made up by large scale investment by Government of India into sectors which can have a higher multiplier effect leading to economic gains across different sections. A strong, well-capitalised banking sectorwith high level NPAs behind it is fully prepared support private investment in next phase.

Impact of the second wave of COVID-19 on the financial sector and measures taken

The Reserve Bank of India has done commendable work by acting swiftly and forcefully to relieve liquidity restrictions, regain market confidence, and stop the spread of adverse conditions to other sectors of the economy. The Central bank and policymakers made a number of announcements to support the flow of credit to the desired sectors and maintain a sufficient level of liquidity in the system to tackle the impact of the second wave of Covid on the financial sector.

As a result, the Indian financial system held up well throughout the pandemic?s volatility and is stronger to meet the increasing credit demands. The balance sheets of Scheduled Commercial Banks (SCBs) are comparatively better, with higher capital adequacy, lower non-performing assets (NPA) and increased profitability.

2. BUSINESS OVERVIEW & KEY DEVELOPMENTS

Religare Enterprises Limited (referred to as "REL" or "Company") is a Core Investment Company (CIC) that is regulated by the Reserve Bank of India (RBI). Additionally, REL serves as the group?s publicly traded holding company for the subsidiaries running its diverse financial services operations.

The following are the four primary financial services ventures that it has through its subsidiaries:

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

• SME Finance NBFC - Religare Finvest Limited (RFL)

• Housing Finance (Affordable) - Religare Housing Development Finance Corporation Limited (RHDFCL)

• Retail Broking - Religare Broking Limited (RBL)

The Religare Group has access to a large customer base, including more than 1 million policyholders in the insurance industry, 1 million customers in the broking industry (of whom 1.18 lakh are actively trading), more than 26 thousand customers served through MSME finance, and more than 10,000 customers served through affordable housing finance. As of March 31, 2022, the Group employed more than 11,000 professionals to serve a wide range of clients. REL has a J.V., as well as 27 subsidiaries.

Key Developments:

REL?s Preferential Issue of Rs 570 Crores:

REL raised Rs. 570 Crores through the Preferential allotment of 5,41,56,761 equity shares 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. The company invested the funds in its various subsidiaries to help them revive and expand their operations.

One-Time Settlement of RFL

Post receipt of RBI letter dated February 11 2022 on the Debt Resolution Plan (DRP), Religare Finvest Limited ("RFL") proposed the One Time Settlement (OTS) to its lenders. The proposed settlement amount in the OTS proposal is to be paid by RFL within 90 days of signing of settlement agreement with the lenders. It has been agreed that Lenders shall issue No Dues Certificate to RFL on receipt of their respective share of settlement amount. This settlement, once executed, shall pave the way for REL to close past issues with RFL lenders and look forward to reviving the MSME lending business at RFL.

Declassification ofold promoters and resolution of legacy issues with SEBI

During the year, the company received approval from the stock exchanges approving the de-classification of erstwhile promoter group by specifically naming those individuals and their entities as public shareholders. This development has effectively recognised REL as a professionally managed company with diverse set of shareholders and institutional investors. In order to underline adherence of corporate governance norms of highest level, the company also settled past legacy issues with SEBI which were communicated to it earlier. These issues were brought to the notice of current management by SEBI and referred to non-compliance period between April 1, 2011 and March 31, 2018 during which period, the management control rested with Malvinder Mohan Singh, Shivinder Mohan Singh and certain individuals who were accustomed to act on their instructions.

Religare Enterprises Limited becomes debt free; to enter new businesses

Religare Enterprises Limited became debt-free during the year by paying off outstanding debts it owed to its subsidiary, Religare Finvest Limited. As a holding company, REL is working towards building a war chest to finance the growth of its subsidiaries including health insurance and broking businesses.

The company also plans to grow in new strategic areas, such as Asset Reconstruction (ARC), Alternative Investment Funds, Insurance Broking, and Digital Wealth Management. The identified sectors have business synergies with REL?s existing BFSI verticals, which could boost the business and financial performance of the Religare Group.

3. KEY SUBSIDIARIES AND OPERATIONAL PERFORMANCE

The table below lists the key subsidiaries with operations as at March 31,2022:

Company	Status	REL?s Stake	Major Area(s) of Operation
Lending
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	65.5%	• Health insurance & related products
Broking
Religare Broking Limited (RBL)	Subsidiary	100%	• Retail Broking
			• Depository & E-Gov. Services

SME Finance NBFC - Religare 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 Micro & Small Medium Enterprises (MSMEs) 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. By 2016, RFL had grown to build a peak business book of over Rs. 16,000 crore Assets Under Management (AUM) to become one of the largest MSME financing platforms in India. Currently, RFL has an employee base of over 250 and it has 19 branches pan India. RFL?s product offerings comprises of:

a) MSME-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 for different purposes including business expansion and purchase of plant and machinery.

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

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 RFLs Fixed Deposit by Laxmi Vilas Bank (now DBS Bank) and other non-core (non SME) investments done by RFLs ex-management, which resulted in losses for the company.

RFLs 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 NPAs 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 31,2022.

One Time Settlement (OTS) by Religare Finvest Limited (RFL)

Post receipt of RBI letter dated February 11 2022 on the Debt Resolution Plan (DRP), Religare Finvest limited ("RFL") proposed the One Time Settlement (OTS) to its lenders. The proposed settlement amount in the OTS proposal is to be paid by RFL within 90 days of execution of settlement agreement with the lenders. It has been agreed that lenders shall issue No Dues certificate to RFL on receipt of their respective share of settlement amount. In addition, company proposed the upside sharing from recovery of proceeds from Corporate Loan Book and Fixed Deposits with Lakshmi Vilas Bank (now DBS Bank) with the lenders.

Operational Performance

As on March 31st, 2022, SME Financing constituted over 41% of RFLs lending business. RFLs SME loan book has decreased from INR2,343 Crore in FY 2021 to INR 1637 Crore as on March 31, 2022.

During the year ended March 31, 2022, RFL has also submitted One Time Settlement (OTS) proposal to the lenders. The respective banks are expected to issue sanction letters regarding acceptance of OTS offer in due course.

RFL is taking all necessary corrective actions and efforts to come out of the RBI CAP and resume normal business operations at the earliest.

SME-Secured

As on March 31, 2022, RFLs SME-Secured loan bookwas at INR 1,637 Crore with 1,296 active accounts:

SME Secured Book Size in last 3 years

Highlights:

• 30% of SME book has been exited since 2021

• ~57% of portfolio is from Educational Institutions (EDI), Hotels & restaurants, Commercial Real Estate, Textiles, Metals and Automobiles

• Standard book maintained at ~ 49% with contribution of EDI, Hotel & Restaurant at 30%.

Threats /Risks:

• Non-banking financial companies need to diversify risks across sectors and geographies, as well as maintain capital adequacy norms and introduce core banking solutions going ahead. Historically, the NBFCs grew by leaps and bounds due to regulatory arbitrage between banks and NBFCs. However, with tougher regulatory stance, the risk taking capability of the NBFC?s is shrinking rapidly, adversely affecting the arbitrage between lenders and non-banking entities ceasing to exist.

• Lack of a robust supervisory and governance framework and lapses in the corporate governance of a few non-bank lenders had an adverse impact at sectoral level, including the impact of capital flows to the sector. The liquidity profile and growth of the non-banking finance sector was thereby severely impacted over the last two years owing to trust deficit in the sector. This was despite relatively no change in business activity in the rest of the sector. An effective corporate governance is critical to the proper functioning of any organization and strong corporate governance promotes trust across all stakeholders.

Opportunities: The New 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. Customized solutions for each borrower driven by new age technology solutions will also aid in expansion of customer base.

‘Co-lending? is another 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 offunds from banks and greater reach of the NBFC.

Housing Finance - Religare 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 its customers, both formal and informal income segment belonging to low & medium income groups. It is a 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 creditworthiness 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 31,2022, RHDFCL?s loan book size was Rs 347 crore with 100% of collateral as residential properties and 97% funding to retail borrowers. Out of the total book size, 68.2% of the lending has been for Home Loans, 28.9% for Loan against Property (LAP) and 2.8% towards builder funding. The total loan book size has reduced by Rs 105 crore as on March 31, 2022. The reduction in the book was primarily due to constraints faced by RHDFCL in raising more funds 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 61.03 crore and Rs 3.84 crore. The average ticket size for the home loans has been around Rs 11.4 lakh. RDHFCL maintained a CRAR of 94.4% as on March 31, 2022. The Gross NPA and Net NPA ratio were respectively 8.6% and 3.6% 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 94.4.%. RHDFCL sales and distribution, risk management and operations function are adequately robust to scale up lending operations in a prudent manner.

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

CHIL, 65.5 % held by REL, 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 1,385+ locations across country with 207 branches and 18,900+ hospitals and healthcare centers empaneled for cashless claims. It has a bouquet of 30 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 & improved 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 continued to invest in Digital properties for its customers, partners and its employees.

Operational Performance

During the FY22, CHIL garnered Gross Written Premium of Rs 3,947 crore (which represented a growth of 53% from FY21). CHIL reported PBT of Rs 15.6 crore and PAT of Rs 11.5 crore in FY22. As on March 31, 2022 CHIL had a networth of Rs 1,207 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 subsequent waves of Covid pandemic on the business operations. As a Stand Along Health Insurance Company (SAHI), the company operated across three segments of Personal Accident Insurance, Health Insurance and Travel Insurance.

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 has impacted profitability of Health Insurance companies in FY22. 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 an extended period beyond COVID-19 crisis.

Opportunities: Indian health insurance market is a growing market and registered a market size of Rs 80,471 crore in FY22, up by 26.2% from last year. Out of all health insurance service providers in India, Public Sector institutions have a market share of 44% and Private Insurers having a market share of 30% and Stand Alone Health Insurance Companies (SAHI) hold 26% market share. However, in terms of retail Gross Written Premium (GWP), SAHI had the biggest share of 51% in FY22.

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 insurance products for next few years.

Retail Broking -Reliaare 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 1200 points of presence spanning 400+ towns and cities across the length and breadth of India and it services more than 1 million unique customers. RBLs distribution strategy entails a judicious combination of its own branches and a strong network of sub-brokers and franchisees that help extend RBLs presence and make the Religare brand visible in the far reaching 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 Bank of Maharashtra,, 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 and continues to expand its Bancinvest Partnerships. Under the Broking Business the following key segments are operational:

• 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 also a 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 clients 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 to 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 PermanentAccount 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. The Company is also registered with SEBI to act as a Registrars to an issue and share transfer agent with effect from April 5, 2022.

Operational Performance

RBL achieved one of its best performance in last 5 years across all business and financial parameters. To put things into perspective, its consolidated total revenue for RBL and its subsidiary Religare Commodities Limited went up from Rs.244.5 Crores to Rs. 284.3 Crores [16% jump in revenues (YoY)] and reported profit after tax of Rs.22.6 Crores in comparison to profit of Rs.10.5 Crores in previous financial year [more than 100% jump in Profit after tax (YoY)]. The Company also reported 47% increase in average daily turnover as compared to the last year.

Also, RBL reported a sharp uptick in new client addition of nearly 61% (55k to 88k+) in the last financial year. The momentum was not only restricted to the broking business, other business of E-Governance also gained tremendous impetus as it managed to add over6300+ franchises, taking our presence from ~6000 to 12300+ touchpoints.

Opportunities:

• Penetration in Tier II, III and beyond geographies, supported by our strong physical presence across India

• Adoption of Digital means to access the services in Financial Sector

• Strong tailwinds from the rise in financialisation ofdomestic savings across different income groups

• Fulfilling all the financial requirements of a customer under one roof, by offering wealth management, PMS, Insurance solutions and E-governance Services apart from our stock broking services.

Threats/ Risk:

• Economic slowdown impacting investor sentiments and business activities

• Slowdown in global liquidity flows

• Rise in competition intensity

• Rise in appeal for other assets class viz. fixed income products, real estate, gold etc.

However, the penetration of Capital Markets in India is still low and it leaves a lot of scope for structural growth of markets. The Broking business is witnessing some entities offering very low or negligible brokerage which intensifies competition and short term adverse impact on profitability. RBL is adapting its products, technology and service experience to increase its volumes and mitigate this risk.

4. REVIEW OF FINANCIAL PERFORMANCE:

The highlights ofstandalone and consolidated financial performance of the Company in FY22 are as under:

(Rs in Crore)

	Financial Year 2021-22		Financial Year 2020-21
Particulars	Standalone (Audited)	Consolidated (Audited)	Standalone (Audited)	Consolidated (Audited)
Total Income	29.56	3372.44	118.78	2530.47
Total Expenditure	56.37	4403.40	54.43	3027.85
Profit before Tax	(26.81)	(1,030.96)	64.35	(497.38)
Exceptional Items	-	-	-	-
Profit/(Loss) before Tax after exceptional items	(26.81)	(1030.96)	64.35	(497.38)
Share in Profit / (Loss) of Joint Ventures	-	(0.10)	-	(0.08)
Profit/(Loss) Before Tax	(26.81)	(1031.06)	64.35	(497.46)
Income tax Expense/ (Credit)	(0.80)	507.46	0.35	(19.64)
Profit/(loss) After Tax	(26.01)	(1538.52)	64.00	(477.82)
Other Comprehensive Income	(0.21)	(33.62)	0.42	28.69
Total Comprehensive Income forthe period	(26.22)	(1572.14)	64.42	(449.13)
Less: Share of Non- Controlling Interest	-	(6.15)	-	37.76
Total Comprehensive Income/(Loss) (after tax & non-controlling interest)	(26.22)	(1566.00)	64.42	(486.89)

Consolidated Performance

REL recorded a Profit Before Tax of Rs (1,031.06) crore, for FY22 as compared to Profit Before Tax of Rs. (497.38) crore, for FY21. Profit After Tax was Rs (1,538.52) crore for FY22 as compared to Profit After Tax of Rs. (477.82) crore for FY21. Total Comprehensive Income/(Loss) attributable to the Owner of the Company for the

FY22 was Rs (1566) crore as compared to Rs. (486.89) crore in FY21. Basic Earnings per Share was Rs. (51.33) in FY22 compared to Rs. (19.65) in FY21.

Standalone Performance

REL recorded a Profit Before Tax of Rs. (26.81) crore, for FY22 as compared to Profit Before Tax of Rs. 64.35 crore, for FY21. Profit After Tax was Rs. (26.01) crore for FY22 as compared to Profit After Tax of Rs. 64 crores for FY21. Total Comprehensive lncome/(Loss) for the FY22 was Rs. (26.22) crore, compared to Rs. 64.41 crore for the FY21. Basic earnings per share decreased to Rs. (0.86) in FY22 from Rs. 2.47 in FY21.

Seament-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 FY22 and in FY21 is tabulated below:

(Rs in Crore)

	As per Ind AS
Particulars	FY22		FY 21
	Amount	% of Total Income	Amount	% of Total Income
Income From Lending Activities	211.37	6.27%	341.13	13.48%
Interest Income on Fixed Deposits with Banks	25.54	0.76%	19.94	0.79%
Interest Income/Charges on Delayed Payments	22.23	0.66%	11.51	0.45%
Income from Investments	218.01	6.46%	175.60	6.94%
Commission Income	6.73	0.20%	7.02	0.28%
Income From Broking Operations	228.37	6.77%	204.85	8.10%
Net Income From Insurance Premium	2,509.15	74.40%	1,729.47	68.35%
Other Business Income	2.22	0.07%	2.94	0.12%
Total Revenue From Operations	3,223.62	95.59%	2,492.45	98.50%
Other Income	148.82	4.41%	38.01	1.50%
Total Income	3,372.44	100.00%	2,530.47	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, Reversal of premium deficiency reserve etc. Other Income recorded in FY22 of Rs. 148.82 crore, Contribution of Other Income to Total Income increased to 4.40 % in FY22, as compared to 1.50% in FY21. Below is a comparison of the components of our Other Income during FY22 with that in FY21:

Particulars	FY 22	FY21
Balances Written Back /Bad Debts and Loans Written off Recovered	6.37	3.06
Income From Support Services	0.01	0.01
Net Gain on de-recognition of Property, Plant and Equipment	0.33	0.36
Interest Income on Others	3.78	20.40
Premium Deficiency Reserve Provision Reversal	135.88	-
Income towards ARC transaction (Net)	-	4.23
Miscellaneous Income	2.45	9.96
Total Other Income	148.82	38.02

Key Ratios (Consolidated level):

(Rs in Crore)

Particulars	FY 22	FY 21
Total Income	3,372.44	2,530.47
EBITDA	(237.99)	286.39
EBITDA Margin %	(7)%	11%
PBT	(1031.05)	(497.46)
PBT Margin %	(31%)	(20%)
PAT	(1538.51)	(477.82)
PAT Margin %	(46%)	(19%)
Current Ratio	0.52	0.50
Debt Equity Ratio*	-	16.42
Return on Networth *	-	(160%)

Consolidated networth is negative.

The company?s profitability ratios have decreased at both standalone and consolidated levels. EBIDTA Margin /PBT Margin / PAT Margin have deteriorated due to decreased profitability in all key subsidiary businesses except (RBL) and losses at RFL. PAT has decreased in CHIL to Rs 14 crore in FY22 from Rs 101 crore in FY21. PAT has increased in RBL to 19.30 crore in FY22, in comparison to PAT of Rs. 5.35 crore in FY21. RDHFCL achieved a PAT of Rs 4.14 crore in FY22 in comparison to PAT of Rs 9.1 crore in FY21. The loss reported by RFL has increased to Rs 1,747.06 crore in FY22 in comparison to loss of Rs 575.5 crore in FY21. REL standalone also reported PAT of Rs (26) crore in FY22 in comparison to profit of Rs 64 crore in FY21, the company reported net profit in FY21 primarily due to profit from the sale of secondary stake of 6.39% in CHIL.

5. RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

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 Management Policy. Risk Management Policy is aimed at identification, assessment, mitigation, monitoring and reporting of identifiable risks and recording of each identified risk along with their mitigation plan. The implementation of the Risk Management system and maintenance of record of risk and mitigation plan in Risk & Control Matrix (RCM) of various functional areas is updated and tested 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 parameters, which help in identification of risks and their classification as High, Medium and Low categories on the basis of likelihood, impact and velocity.

The Risk Management Committee of the Company and its key operating subsidiaries reviews the risk management policy on an annual basis. The Company has implemented a formal risk management policy and framework to ensure that a comprehensive risk management process is in place at all times, including appropriate board and senior management oversight.

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.

Company is a registered NBFC (CIC) and is exposed to various risks as stated in the risk management policy of the company and its key operating subsidiaries. The Company and its subsidiaries have adequate control environment for identification and assessment of applicable risks on a periodical basis through an effective Risk Management Framework, which has been developed encompassing the periodic risk assessment. Mitigation plans and controls are documented for each identified risk in the form of policies & procedures and risk & control matrices (RCM). 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 a robust mechanism to ensure an ongoing review of systems, policies, processes and procedures to contain and mitigate risk that arise from time to time. The Company has satisfactory system of periodical monitoring, testing 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 and Risk Management Committee of the Company and its key operating subsidiaries on a quarterly basis.

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. The scope ofaudit is reviewed and approved by the Audit Committee of the Company and its respective subsidiaries. The company also conducts Information System (IS) and Cyber Security Audit on an annual basis and report of the same is presented to the Audit Committee of the Board.

The Audit Committee reviews and evaluates adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations across the relevant functional areas to continuously strengthen the internal control framework. 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.

6. 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 have restored the 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 our competent resources and by attracting new talent. Employees are our most important and critical asset and we are committed towards their overall development. We inspire our employees with meaningful work and passionate teams and enable them to find purpose and make an indelible impact. 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 has been running a successful engagement calendar including various wellness initiatives to help employees in their physical and mental well-being. The Company is committed towards building an encouraging work environment with a healthy work life balance.