rpsg ventures ltd share price Management discussions


(Annexure ‘A? to the Board?s Report)

RPSG Ventures Limited (‘RPSG Ventures?, ‘RVL? or ‘the Company?), formerly CESC Ventures Limited, is part of the RP-Sanjiv Goenka Group (‘RP-SG Group? or ‘the Group?), a leading business conglomerate in India. Along with its subsidiaries, the Company operates a diversified portfolio of businesses including information technology (IT) services, business process management (BPM), fast moving consumer goods (FMCG), ayurvedic formulations, real estate and sports. Other than IT services, which constitute its standalone operations, all other businesses are carried out through various subsidiary companies (See Box 1).

Box 1: RPSG Ventures Limited — Key Businesses and Operating Entities

RPSG Ventures? core business operations as a standalone entity consists of information technology (IT) services, which are currently being provided to certain Group companies operating in the power sector. Its key operating subsidiaries include:

• Firstsource Solutions Limited which, along with its subsidiaries, is a leading provider of customised business process management (BPM) services in the US, the UK, India and the Philippines.

• Guiltfree Industries Limited which, along with its step-down subsidiary Apricot Foods Private Limited, operates in the Indian FMCG sector under the brands ‘TOO YUMM!?, ‘Naturali? and ‘Evita?.

• Herbolab India Private Limited, which markets ayurvedic formulations focusing on health and wellness under the brand ‘Dr Vaidya?s?.

• Quest Properties India Limited, which operates in the real estate sector. It manages Kolkata?s first luxury shopping mall ‘Quest? and is developing a residential project in Haldia, West Bengal.

• APA Services Limited, which through its subsidiaries, operates and manages the iconic football club ATK Mohun Bagan and a table tennis franchise RPSG Mavericks.

• RPSG Sports Private Limited, which owns and operates the ‘Lucknow Super Giants? franchise of the Indian Premier League

RPSG Ventures also leverages emerging opportunities in India through incubation of new businesses and investments in venture capital funds.

This report presents a review of operational and financial performance of RVL?s businesses during the year. It also discusses the strategy and important initiatives taken by the Company and its key subsidiaries to meet their business objectives.

MACROECONOMIC OVERVIEW

2021-22 saw a sharp turnaround in global economic activity, after a major decline in the previous year due to the Covid-19 pandemic. According to the IMF, world output grew at 6.1% in 2021 after a contraction of (-) 3.1% in 2020. India also registered an impressive GDP growth of 8.9% in 2021-22, compared to a fall of (-) 6.6% in 2020-21 — making it the fastest growing large economy in the world.

As shown in Table 1, the improvement in GDP was broad-based with all sectors contributing to the performance.

Table 1: GDP Growth in India and Key Sectors

2020-21 2021-22
Agriculture 3.3% 3.3%
Industry -3.3% 10.3%
Services -7.8% 8.6%
GDP -6.6% 8.9%

Source: Central Statistics Office (CSO); Second Advance Estimates

Although Covid-19 outbreaks during the year did impact economic activity, the return to normalcy was much faster once the restrictions were lifted. There is a consensus that pandemic-related risks have come down considerably with high vaccination coverage, better therapies to deal with infections and preparedness of businesses to operate in the pandemic-affected environment. Even as there are fresh challenges emanating from the war in Ukraine, including high inflation in global commodities and energy, the outlook for the Indian economy remains positive. The Reserve Bank of India, in its Monetary Policy Report released in April 2022, pegs India?s GDP growth rate in 2022-23 at 7.2%.

As far as the Company?s performance is concerned, the impact of the Covid-19 crisis varied with industry segment in question. Although there has been a reduction in Covid-related risks across the board, the impact on the FMCG and Sports businesses was greater, compared to IT and BPM services. Accordingly, risks and outlook for each business have been covered in their respective sections.

INFORMATION TECHNOLOGY (IT) SERVICES

Service Portfolio and Opportunity

RPSG Ventures currently provides IT consultancy and support services to entities engaged in electricity generation and distribution. Its core strength includes deploying best-in-class IT solutions for the sector through a robust mix of capabilities in existing and emerging technologies which is reflected in its intellectual property of 350+ applications. These capabilities are further enhanced by its strong team with diverse skill sets, covering project management, programming, networking and security. Box 2 presents key services provided by the Company.

Box 2: RPSG Ventures? Portfolio of IT Services

• Application Development and Management.

• Setup and Operations and Maintenance (O&M) of IT Infrastructure.

• Data center and Disaster Recovery set-up and solutions.

• Cyber Security Management.

• Smart Building Solutions.

RVL?s applications cover the entire range of operations and processes carried out by power utilities in their day-to-day functioning. These include electricity billing, MIS reporting, online consumer services, monitoring and management of generation and distribution assets.

Besides, there are applications that can be utilised across industries include customer relations (CRM), human resources (HRMS), treasury management system, cyber security, administration, e-services, digital communication solutions, applications in social media, mobility, analytics and cloud computing.

These capabilities provide RPSG Ventures with a unique opportunity to market its services to clients both within and outside the power sector. In 2021-22, such services were provided to various Group entities including CESC Limited, Haldia Energy Limited (HEL), Dhariwal Infrastructure (DIL) and the Group?s distribution franchisees (DFs) in Rajasthan and Maharashtra.

Operational Performance

RVL continued to innovate and help its clients develop a competitive edge by providing quality services, ensuring that its clients had high availability of the core network and that the infrastructure met stringent parameters of reliability, security and scalability. Important initiatives undertaken in key service areas during 2021-22 are presented below:

Power Generation Companies: RPSG Ventures develops applications for generation plants and offices of CESC, HEL and DIL to digitise, automate and improve business processes. Software applications, mobile and ICT tools have been deployed to ensure system driven expenditure management, e-procurement, HR and IR functions. Besides, advanced data analytics have been used to develop real-time dashboards. In 2021-22, considerable emphasis was on cyber security. This involved strengthening of IT-OT network security, identification of a critical information infrastructure, development of a Cyber Crisis Management Plan (CCMP) and compliance with ISO 27001 and ISMS. Further details are provided in Box 3.

Power Distribution Companies: Several predictive and optimization tools have been developed to monitor and reduce cost. Continuing with the theme of digital transformation of processes, tab-based disconnection and reconnection modules were implemented during the year. In 2021-22, RVL developed an ‘Electronic Permit System? software which coordinates with various departments and issues permits for maintenance work, thereby establishing processes to augment the safety of people engaged in distribution operations.

Distribution Franchises (DF): Many initiatives were taken to improve efficiencies of these businesses. For Malegaon DF, it implemented a mobile app-based solution for disconnection and recovery of outstanding dues; another application was introduced for generation of analytical MIS reports. For Rajasthan DFs, a bi-monthly billing for agriculture and below poverty line (BPL) consumers was implemented. It has also implemented an e-filing and document upload system for registering complaints and service requests.

Human Resources: New features introduced in the HRMS in 2021-22 include electronic communication of performance bonus and increments to employees. The HRMS is being migrated from the existing RISC-based to Intel-based environment in line with the new Business Continuity Plan (BCP). This migration will also include deployment of the latest versions of relevant software for enhanced features such as remote availability.

Software applications were also developed to enhance digital capabilities of various other functions and companies in the RPSG Group including Audit, Corporate and Group HR, Conferences and Events. Developments in the area of IT infrastructure and security are provided in Box 3.

Box 3: IT Infrastructure and Security Projects

RPSG Ventures continues to expand its expertise in IT infrastructure and security. Some of its key developments in 2021-22 are:

• The Cyber Crisis Management Plan (CCMP) was approved by CERT-In authority both for Generation and Distribution divisions and the Critical Information Infrastructure (CII) document were submitted to NCIIPC for approval. Security audit of ICT and operation technology (OT) for both generation and distribution division are being carried out in consultation with a CERT-In empanelled auditor.

• Training programmes on Cybersecurity Awareness were conducted; e-mailers are regularly being sent to all employees. Besides, mock drills and Table Top Exercises have been carried out for both Generation and Distribution systems.

Security Infrastructure and Processes are being upgraded and taken to the next level. RVL built the communication, networking and security systems for the RPSG IB School in 2021-22. Design, planning and implementation is also underway for the next-gen 24x7 Security Operation Centre for the Group. Compliance with ISMS framework and ISO certification is also in progress.

• Design, planning and implementation of consolidated Disaster Recovery Centre is in progress. In line with the objective of building a robust and fail-safe Business Continuity Plan for entire IT application ecosystem, proof of concepts based on different IT platforms were reviewed to select the most suitable environment for CESC. The process is now underway to build the second phase of the project i.e. the ‘compute? part of the DC-DR setup.

Human Resources (HR)

RVL?s HR strategy is predicated on a preference for in-house talent and filling vacancies from outside in line with a structured recruitment policy. Fresh talent from premier technical institutes is hired through a summer internship programme with an opportunity for pre-placement offer, whereas lateral recruitment is carried out based on the need to build capability, where required.

Learning and Development is a key focus area, given that mastering of new skills, processes and technologies are critical for success in IT. In 2021-22, the Company offered various technical training courses such as big data analytics, IoT and its applications, ‘AI/ML —Future Application in Power Industry?, cyber security and agile software methodology.

To facilitate continuous learning of its employees, the Company offered employees online membership of the Association of Computing Machinery, an online platform for IT professionals for nurturing knowledge, collaboration and innovation. RVL also facilitated e-Learning on behavioural and management courses in collaboration with SkillSoft.

21

Several in-house technical and behavioural training programmes were also organised on emerging technologies in power industries, change management, strategic management, workshop on "Core Values", management development programme for the first time managers.

Overall, the organisation imparted 687 man-days of training to its employees during the year.

During the year, RVL adhered to its system driven process of annual performance appraisal, which incorporates a structured reward and recognition process to foster a performance-based culture. Apart from its existing reward and recognition schemes — ‘Udaan? and ‘Nakshatra? — a spot recognition scheme ‘Kudos? was launched in 2021-22 to recognise specific accomplishments.

RVL has effective, employee-friendly HR policies and processes that keep employee engagement high and enhance welfare. Communication meetings are regularly organised by the leadership team to percolate client expectations, address queries of employees and generate a free flow of ideas. As on March 31, 2022, RPSG Ventures had 85 employees.

Financial Performance

Table 2 summarises the financial performance of RPSG Ventures Limited as a standalone entity.

Table 2: Abridged Financial Performance of RPSG Ventures (Standalone)

Rs Crore

2021-22 2020-21
Revenue from operations 161.5 114.0
Other Income 135.2 115.3
Total Income 296.7 229.3
Employee Benefit Expenses 27.7 27.8
Operating & Other Expenses 66.5 30.9
Finance Costs 3.6 0.0
Depreciation 1.1 0.5
Total Expenses 98.9 59.2
Profit Before Taxes (PBT) 197.8 170.1
Tax Expense 53.1 42.8
Profit After Taxes (PAT) 144.7 127.3
Diluted EPS (H) 54.1 48.0

Operating revenues of RPSG Ventures as a standalone entity grew at an impressive 41.7%, from Rs 114 crore in 2020-21 to Rs 161.5 crore in 2021-22. Other income, which primarily includes dividend income from its subsidiary Firstsource Solutions Limited, also increased in 2021-22 compared to the previous year. Consequently, total income (including other income) increased by 29.4% from Rs 229.3 crore in 2020-21 to Rs 296.7 crore in 2021-22.

Total expenses increased from Rs 59.2 crore in 2020-21 to Rs 98.9 crore in 2021-22, primarily driven by higher operating and other expenses. In contrast, employee costs remained stable at Rs 27.7 crore in 2021-22, compared to Rs 27.8 crore in the previous year.

Accordingly, profit before taxes (PBT) grew by 16.3% from Rs 170.1 crore in 2020-21 to Rs 197.8 crore in 2021-22, while profit after taxes (PAT) for the year was Rs 144.7 crore, reflecting a 13.6% increase over

Rs 127.3 crore recorded in 2020-21. Diluted earnings per share (EPS) increased from Rs 48.0 in 2020-21 to Rs 54.1 in 2021-22.

Debtors Turnover Ratio, Current Ratio and Return on Net worth worked out to 93.85, 0.66 and 7.19% respectively for the financial year ended March 31, 2022 as against 9.65, 1.50 and 7.26% respectively for the financial year ended March 31, 2021. Debtors turnover has improved over the previous year on account of timely collection from customers. Increase in current liabilities due to acceptance of security deposits from the Customers resulted in decrease in Current Ratio.

The above key financial ratios are for the Company as a standalone entity and changes in Debtors Turnover Ratio and Current Ratio are significant as defined under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, i.e., over 25% compared to previous year. Inventory Turnover Ratio is not relevant to the Company?s financial performance and has not been reported, as the Company does not carry any inventory. Interest Coverage Ratio and Debt Equity Ratio for the financial year ended March 31, 2022 are 56.25 and 0.04, respectively, which are not comparable since these were not computed for the year ended March 31, 2021 as the Company did not have any debt in its books as on that date.

Box 4: Covid-19 – Risks and Response

Although Covid-related risks have come down, one cannot rule out the possibility of difficult future waves of the pandemic. This exposes RVL to risks associated with effective execution of its projects, meeting deadlines, as well as safety and welfare of its employees and other stakeholders.

RVL will continue to rely on its successful systems and processes to deal with the situation: an emergency preparedness plan and a core committee to monitor the situation and take quick decisions; utilising technology for effective communication and remote operations; guidelines on safety and hygiene to manage critical operations where remote working is not an option and standard operating procedures (SOPs) for resuming operations after lockdowns.

BUSINESS PROCESS MANAGEMENT (BPM)

RPSG Ventures is present in the BPM industry through its subsidiary Firstsource Solutions Limited (‘First source? or ‘FSL?), a publicly traded entity on the Indian stock exchanges. RVL holds 53.66% stake in First source.

First source provides transformational business process solutions leveraging its ‘Digital First, Digital Now? approach to help simply complex business processes, elevate customer exprience and create value across the chosen industry segments within Banking and Financial Services, Healthcare and Communications, Media and Technology.

The tech-based solutions span three major areas:

• Digitally Empowered Contact Center (DECC)

• Intelligent Back Office (IBO)

• Platform, Automation and Analytics (PAA)

First source works with over 150 global clients, which, inter-alia, include leading US based hospital networks — including 17 Fortune 500 and 9 FTSE 100 companies — by delivering innovative and value-added business process management services through a right mix of the latest technologies, human capabilities and industry expertise. Box 5 provides some details of its client base.

Box 5: FSL?s Client Profile

Banking and Financial Services: 5 of the top 10 US credit card issuers, 2 of the top 6 retails banks in the UK, 4 of the top 15 mortgage servicers in the US and 6 of top 15 mortgage lenders.

Healthcare: 7 of the top 10 health insurance / managed care companies in the US and over 1,000 hospitals in the US.

Communication, Media and Technology: UK?s largest news and broadcasting company and 2 of the top 6 telecom and broadcasting company in the US.

Diverse: One of the top 3 utility companies in the UK

FSL has 26,557 employees operating from 39 service facilities spread across the US, the UK, India and the Philippines to support its clients. To benefit from opportunities presented by greater adoption of digital technologies across the globe, the company has developed several applications and tools in areas such as automation, communication, customer intelligence and productivity, where it owns intellectual property.

Over the years, FSL has earned several awards and accolades. Here is a quick glance at its wins in 2021-22:

• Ranked as top Business Process Services (BPS) provider in its ‘BPS Top 50? report by Everest Group; Recognized as a ‘Leader? by Everest Group in Healthcare Payer Operations PEAK Matrix? Assessment as well as Mortgage Operations PEAK Matrix? Assessment 2022

• Named a ‘Leader? in the Payer Digital Transformation Services category and a ‘Rising Star? in the Payer Business-Processes-as-a-Service (BPaaS) Services category by Information Services Group (ISG) in their quadrant report on Healthcare Digital Services – ISG Provider Lens; positioned as a ‘Leader? by Nelson Hall in its ‘Intelligent Automation in Banking NEAT 2021? report

• Included in 2022 Bloomberg Gender-Equality Index for its commitment to transparency in gender-data reporting and creating a workplace conducive for diverse talent to succeed; received Investors in People (IIP) Gold accreditation for its UK operations

• Ranked No.1 in the 2022 Best in KLAS: Software & Services Report; noted as a ‘Leader? in the ‘Eligibility and Enrolment Services category

• Won the Gold Award in the Financial Services category at the 2022 UK Complaints Handling Awards; ‘Best Citizen Developer Program? - UiPath Automation Excellence Awards 2021

• Won awards in Best Outsourced Contact Centre category and Best Trainer category at the Welsh Contact Centre Awards 2021

• Won in four categories at the Asia Pacific HRM Congress 2021: Innovation in Retention Strategy; Best Programme?Use of CSR Practices; Innovation in Recruitment; and Best Service Provider in HR

• Bronze Award in Best Small Customer Service Team category at the European Contact Center & Customer Service Awards 2021

During the year, FSL?s total income, (including other income), increased by 16.6% from Rs 5,079.2 crore in 2020-21 to Rs 5,921.7 crore in 2021-22. Expenses grew at 16.4%, from Rs 4,532.4 crore in 2020-21 to Rs 5,274.6 crore in 2021-22. PBT increased from Rs 431.8 crore in 2020-21 to Rs 647.1 crore in 2021-22. PAT for the year stood at Rs 536.5 crore, reflecting a 48.3% growth over recorded Rs 361.7 crore in 2020-21.

Risks and Outlook

Although risks from the Covid-19 pandemic have come down, one cannot rule out future outbreaks that can affect operations of FSL and its clients. At the same time, FSL?s strategies and processes ensure business continuity including work-from-home, safety of workplace for functioning offices and security of client data in remote working environment. These have proved to be effective in dealing with the pandemic, which gives it confidence to deal with future challenges in this respect.

FSL is also in continuous engagement with its clients to monitor the situation and is prepared to take appropriate action, should the need arise. The shift in focus towards doing business remotely using digital technologies have also created new opportunities, which are being explored with both existing and new clients.

FAST MOVING CONSUMER GOODS (FMCG)

RPSG Ventures has a presence in the FMCG business through its wholly owned subsidiary Guiltfree Industries Limited (GIL). In April 2017, GIL launched packaged snacks under the brand ‘TOO YUMM!? — positioned as "Tastier and Healthier" snacks. Towards the end of 2021-22, the company forayed into the personal care segment by a limited launch of its skin and haircare products under the brand ‘Naturali?. A complete national brand launch is slated for 2022-23. GIL also has a 70% stake in Rajkot-based Apricot Foods Private Limited (AFPL) which markets snacks under the brand name ‘Evita?.

As outlined in the last year?s report, GIL?s strategic intent has been to take the TOO YUM! brand to the next level. In 2021-22, the urgency to realise this objective was visible in its achievements on the four key priorities identified by the company:

Innovation: Successful launch of potato chips with 40% less saturated fat — a first for the Indian market in chips category. Introduction of unique flavours across formats.

Brand Equity: Continue building strong ‘Taste? credentials for the brand while maintaining its differentiated ‘Healthy Snack? equity. Continued to leverage Virat Kohli as brand ambassador.

Distribution: Significant expansion of distribution network comprising directly covered stores, distributors and sub-distributors. Sales teams continue to be fully automated.

Organisational Capability: Operationalised new manufacturing facilities. Investing in people, processes and strong research capabilities.

This strategy has contributed immensely to the Company?s performance in 2021-22, with strong growth in products such as Too Yumm! Karare and Rings. After initial success in the Potato Chips category, GIL is in advanced stages of entering the Indian Namkeens category — which is the largest category in salty snacks in the country — in 2022-23.

As noted earlier, GIL entered personal care category by launching skin and haircare products under the brand ‘Naturali? — with the proposition of being distinctive and relevant for today?s consumers. All Naturali products have the goodness of natural ingredients, are free from harmful chemicals, are effective from first use and, yet are surprisingly affordable. It has signed up two leading Bollywood actresses — Kriti Sanon for haircare products and Shanaya Kapoor for skin care products — as its brand ambassadors. The brand was launched leveraging TV, digital, OOH and print media towards the end of year through select online platforms and modern retail channels. The initial response has been encouraging, and a complete national launch of the brand across all key channels including general trade is slated for 2022-23.

GIL added three new manufacturing facilities during the year — one each West Bengal, Uttar Pradesh and Uttarakhand — taking the total number of plants to seven. These include both own and third-party facilities. The Company has 23 warehouses enabling its presence in top 180 cities across India. As mentioned earlier, its distribution network expanded significantly in 2021-22 and now includes over 800 distributors catering to more than 3.5 lakh retail outlets in urban areas and over 1600 sub-distributors in rural areas.

AFPL?s focus in 2021-22 was to strengthen its distribution network in selected geographies and strengthen its product portfolio to capture different consumer segments. The company added 135 super stockists in 2021-22 and is now present in over three lakh retail outlets. It also launched three products — Punjabi Tadka (Namkeen), Chilli wafers (Chips) and Manchurian Balls Extruded — and increased the choice of pack sizes for ten of its fast selling products.

During the year, the company?s SAP S/4 Hana ERP system with in-built AI/ML and advanced analytics was extended to AFPL to enhance its organisational capabilities.

GIL?s total consolidated income (including other income) grew by 34% fromJ 262 crore in 2020-21 to J 350 crore 2021-22.

Risks and Outlook

Although the second and third waves of the Covid-19 pandemic affected demand, the overall impact on GIL?s business was somewhat less compared to last year. Even as one cannot rule out future outbreaks, Covid-related risks seem to have abated. In fact, the major challenge facing the industry today is the high levels of inflation, exacerbated by the war in Ukraine. Given the huge untapped potential for the packaged snacks segment in India, the company believes that the medium to long term fundamentals of the business remains strong. If the macroeconomic environment remains positive, it expects considerable gains in business volumes in the future.

AYURVEDA

RPSG Ventures is present in the Ayurveda industry through its wholly owned subsidiary Herbolab India Private Limited (Herbolab). Herbolab has a 150-year legacy with over 100 proprietary ayurvedic formulations across multiple categories such as immunity, weight management, respiratory, women?s health and men?s health — approved by the Ministry of AYUSH.

Herbolab is a vertically integrated business with ISO 9001:2015 and WHO: GMP certified manufacturing plant — approved by the Ministry of AYUSH and registered with the US Food and Drug Administration (USFDA). The company is now setting up a larger and new state-of-the-art manufacturing facility at Silvassa, which will become operational in 2022-23. It also has a R&D centre at Thane, Maharashtra.

Its products are marketed under the brand ‘Dr. Vaidya?s?, which has emerged as one of India?s largest Ayurveda brands in the direct-to-consumer (DTC) space. Over 90% of its sales comes from online platforms, including the company?s own portal www.drvaidyas.com as well as all major online marketplaces in India such as Amazon, Flipkart, Netmeds, Pharmeasy, Snapdeal and 1mg. With an eye to further strengthen its DTC business, Herbolab launched a completely new website with strong consumer-oriented content and a focus on superior shopping experience. As a result, its online presence and engagement levels have increased considerably during the year — to around 5 lakh monthly website visits.

Herbolab?s focus has been to utilise its decades of research to develop products that match unique needs and come in innovative formats relevant for the new-age consumers. All its formulations are made by doctors using the purest ayurvedic ingredients. During the year, the company entered the largest segment within Ayurveda — Chyawanprash — with the launch of its ‘MyPrash? range of products. This included, for the first time in India, special formulations of Chyawanprash for post-natal care and diabetes; and formats such as toffees.

During the year, the Company took several measures to set a strong foundation for future growth. It carried-out a comprehensive review of its products to structure a well-integrated portfolio. Apart from the setting-up of a larger manufacturing facility mentioned earlier, it also put in place strong quality processes across the entire product development and manufacturing value chain. Besides, it has successfully established a solid leadership team, with strong experience in Ayurveda, online business operations and digital marketing to drive this growth. Total income (including other income during the year stood atJ 18.7 crore, versus J20.5 crore in 2020-21.

Risks and Outlook

As a company marketing Ayurvedic formulations, Herbolab has been relatively insulated from the Covid crisis. It continued to see robust demand for its health and wellness products, especially immunity and hygiene focused formulations. It believes that its strong online-led sales strategy also mitigates some of the risks associated with expanding distribution networks amidst lockdowns and travel restrictions. Therefore, the outlook for the business in the Financial Year 2022-23 remains positive.

REAL ESTATE

Quest Properties India Limited (QPIL), a wholly owned subsidiary of RPSG Ventures Limited, launched Kolkata?s first upscale shopping mall, ‘Quest?, in November 2013. Over the years, ‘Quest? has become an iconic shopping centre brand with pan-India fame, winning several awards and accolades. Some of the awards and recognition received in 2021-22 were:

• "Images Shopping Centre Next 2021" awards in the categories of "Images most Admired Shopping Centre: Marketing & Promotions" and "Images most admired Shopping Centre: Metro-East" by Images Group.

• "India Shopping Centre 2021" award in the category of "Most Admired Shopping Centre of the Year: Metro-East" by Mapic India.

• "14th CII ENCON Award 2021" in the category of "Recognition of Excellence in Energy Conservation – Service Industry" by Confederation of Indian Industry (Eastern Region).

The situation at the start of 2021-22 was very similar to the last year, with lockdowns and restrictions due to the terrible second wave of Covid infections. Footfalls in the Quest mall witnessed a significant decline during this period. But, in a positive departure from last year, the turnaround was much faster once the restrictions were lifted — both in terms of footfalls and ability of retailers to service customers. The experience after the third wave of infections in January 2022 was even more encouraging.

As a result, revenue of retailers recovered well, other than for specific segments like F&B and cinemas where continued restrictions prevented any meaningful recovery. In fact, for most of the period not affected by Covid outbreaks, total revenue of retailers was better than the pre-Covid levels of 2019-20 — indicating very good conversion of footfalls to sales. Income from mall operations is also a function of overall revenue of the retailers. Despite concessions given to certain retailers during the intense second wave of the pandemic, the company?s revenue from mall operations went up in 2021-22.

QPIL is also developing a residential project in the port-city of Haldia spread over 3.5 acre of land. The first phase of this project was completed in 2019-20 along with the sales and handover of most apartments. During the year, the company successfully sold most of the remaining inventory in the first phase — contributing to its financial performance in 2021-22. Given the improvement in demand conditions during the year, QPIL is evaluating the possibility of launching the second phase of the project.

Taking in account improvement in performance of both its key businesses — mall operations and real estate — during the year, QPIL reported creditable financial results in 2021-22. The company?s total income grew by about 46% fromJ 76 crore in 2020-21 toJ 111 crore in 2021-22 whereas its profit before tax (PBT) turned around from a loss ofJ 0.27 crore in 2020-21 to a profit of Rs 32.21 crore in 2021-22. It is worth noting that both total income and PBT figures for 2021-22 are also an improvement over those reported in the pre-Covid year of 2019-20.

Risks and Outlook

QPIL?s experience during the Covid outbreaks in 2021-22 reflects receding of these risks — aided by high vaccination coverage, better medical therapies as well as better preparedness of consumers and businesses to deal with the pandemic. However, one cannot rule out incidence of more threatening variants in the future, which may affect operations. But, at the same time, QPIL believes it is much better prepared today to deal with such an eventuality. Its ability to minimise the impact of the second and third waves of the Covid pandemic on its business underscores the effectiveness of its processes — be it maintaining a safe and hygienic environment or its collaborative approach with retailers— that have successfully enhanced both footfalls and sales.

SPORTS

RPSG Ventures presence in the sports business is through its two subsidiary companies — APA Services Limited and RPSG Sports Private Limited.

APA Services Limited (APA) is RVL?s wholly owned subsidiary that operates sport franchises in football and table tennis through its subsidiary companies: (i) APA?s subsidiary Kolkata Games and Sports Private Limited holds 80% stake in ATK Mohun Bagan Private Limited, which operates and manages the football club ATK Mohun Bagan, (ii) APA has a 76% stake in Rubberwood Sports Private Limited, which operates and manages table tennis franchise "RPSG Mavericks" that competes in the Ultimate Table Tennis — India?s top league for table tennis.

RPSG Ventures holds a 51% stake in RPSG Sports Private Limited (RPSG Sports), which holds the right to own and operate Lucknow Super Giants — the Lucknow franchise of the Indian Premier League (IPL), the country?s preeminent professional men?s T20 cricket tournament. The remaining 49% stake in RPSG Sports is held by an unlisted company of the RP-SG Group.

Cricket

After emerging as the highest successful bidder in October 2021, the Company chose Lucknow as its city due to rich culture of cricket in Uttar Pradesh and its huge population of over 240 million. Given that Lucknow Super Giants (LSG) was slated to compete in the 2022 edition of the IPL which was due to start towards the end of March 2022, RPSG Sports moved ahead with a clearly crafted strategy without any loss of time.

It appointed the team?s captain, coaching and support staff within the parameters laid out by the BCCI and had a successful IPL Auction, leading up to a strong well-balanced team — something which has been recognised by the cricketing fraternity. This is also reflected in the performance of LSG in the IPL 2022 — tournament so far. As of May 13, 2022, the date of finalisation of this report, LSG features among the top-four teams and is well-placed to qualify for the playoffs with 8 wins from the 12 matches it has played so far. On the non-cricketing front, it successfully tied-up with sponsors. Although ticketing revenues have been affected for the 2022 season due to the event happening at common venues with reduced capacity due to Covid, the outlook for ticketing revenues and its share of central revenues going forward is positive.

Football

ATK Mohun Bagan (ATKMB) participates in the Indian Super League (ISL), AFC Cup and various other football competitions. ATKMB is one of the most successful teams in ISL. In the 2021-22 season, ATKMB qualified for the playoffs for the second consecutive season after finishing runners-up in 2020-21 edition of ISL. ATKMB has also qualified for the group stages of prestigious AFC Cup, with matches scheduled from May 18, 2022. It is committed to the development of football in the country, for which it plans to set up academics and training programmes.

Risks and Outlook

The restrictions and risks associated with the Covid-19 pandemic came down somewhat during 2021-22, especially after the end of second wave of the pandemic. But, as far as the sports tournaments are concerned, significant restrictions continued to apply when it came to allowing spectators and maintaining bio-bubbles for teams.

In 2021-22, while the ISL took place under restrictive conditions — only one location (Goa) and behind closed doors — the table tennis tournament was cancelled for the second consecutive year. The 2022 edition of IPL, which is currently in progress, is restricted to few locations, although limited spectators have been allowed. At the same time, there are considerable challenges like ensuring safety of team. Given that uncertainty around sports tournaments and associated events remains high, this exposes the Company to operational and performance risks.

To mitigate these risks, the operating companies in the business have put in place strong systems and processes to ensure that there is strict adherence of bio-bubble and Covid protocols. They are also taking active measures to increase engagement opportunities with their fan-base and monetise it through events and merchandise. The Company believes that there is significant untapped potential for the professional sports franchise business in India.

RPSG Ventures had a nominal presence in the Restaurant business through its wholly owned subsidiary Bowlopedia Restaurants India Limited (BRIL). As mentioned in our previous year?s report, the Covid-19 pandemic significantly impacted BRIL?s performance resulting in scaling down of its operations, including closure of its outlets. In 2021-22, it was decided to exit the business given its unfavourable risk-return profile. The business has since been shut and all assets / liabilities being disposed of.

CONSOLIDATED FINANCIAL RESULTS

Table 3: Abridged Financial Performance of RPSG Ventures (Consolidated)

Rs Crore

2021-22 2020-21
Revenue from operations 6,670.1 5,599.2
Other Income 15.3 63.8
Total Income 6,685.4 5,663.0
Operating & Other Expenses 1,721.2 1,309.0
Employee Benefit Expenses 4,063.8 3,588.1
Finance Costs 209.3 107.5
Depreciation 291.3 248.9
Total Expenses 6,285.6 5,253.5
2021-22 2020-21
Profit Before Taxes, Share in 399.8 409.5
Net Profit of Associates/JVs and
Exceptional Items
Share in Net Profit of Associate/JVs ^ 108.6 -
Exceptional Items - (115.1)
Profit Before Taxes (PBT) 508.4 294.4
Tax Expense 169.9 236.1
Profit After Taxes (PAT) 338.5 58.3

^ In 2020-21, the figure was below the rounding-off norm adopted

Total consolidated income (including other income) of RPSG Ventures grew at 18.1% during the year from Rs 5,663 crore in 2020-21 to Rs 6,685.4 crore in 2021-22. All key business segments contributed to this improvement in performance during the year.

Total expenses, which includes operating and other expenses, employee costs, depreciation and finance costs, grew by 19.6% from Rs 5,253.5 crore in 2020-21 to Rs 6,285.6 crore in 2021-22. During the year, profit before taxes (PBT) increased from Rs 294.4 crore in 2020-21 to Rs 508.4 crore in 2021-22.

Consolidated profit after taxes (PAT) for 2021-22 saw a significant improvement from Rs 58.3 crore in 2020-21 to Rs 338.5 crore in 2021-22.

ENVIRONMENT SOCIAL GOVERNANCE (ESG)

RPSG Ventures is committed to responsible business practices to promote sustainable and inclusive growth of the ecosystem in which it operates. As a part of the RP-Sanjiv Goenka Group, RPSG Ventures, along with its major operating subsidiary companies, has embraced ESG principles, incorporating them into its operations both as a risk mitigation tool and for long-term value creation. Some areas of intervention are:

• Environment: energy efficiency and emission control; tree plantation; water resource management; promoting green buildings; and, awareness campaigns.

• Social: employee rights, benefits, diversity and engagement; workplace safety; customer rights, engagement and satisfaction; supply chain management; CSR initiatives in education, health and sanitation, community engagement and development.

• Governance: Board composition and committees; ethics and code of conduct; whistle blower mechanism and anti-corruption; disclosures, reporting and transparency; and, shareholders? rights and participation.

Details on ESG initiatives can be found in the Report on CSR, Business Responsibility and Sustainability Report and Report on Corporate Governance which form part of this Annual Report.

INTERNAL CONTROLS

RPSG Ventures? internal control systems are commensurate with the size and nature of its operations. It has well documented policies, procedures and authorisation guidelines to ensure that all transactions are properly authorised, recorded and reported, and all applicable laws and regulations are complied with.

The effectiveness of internal control mechanism is tested and certified by a process of Internal Audit. Major audit observations and follow-up actions are reviewed and monitored by the Audit Committee and placed before the Board of Directors, where necessary. Internal Audit also assesses the effectiveness of risk management and governance process.

RISKS AND CONCERNS

RVL?s risk management framework consists of identification of risks, assessment of their nature, severity and potential impact, and measures to mitigate them. The Company has identified the following key areas of risks and concerns.

Macroeconomic Risks

India?s GDP bounced back strongly in 2021-22 and the macroeconomic outlook for 2022-23 remains positive. Although, Covid-related risks seem to have come down, one cannot rule out emergence of severe variants in the future. As the Company?s services are primarily aimed at the power sector, its fortunes are closely tied with the health of the sector. Therefore, any deterioration in the outlook for the power sector can affect the Company through rationalisation of IT projects and spend of its clients. Additional macroeconomic risks have also emerged due to the war in Ukraine, in the form of spiralling inflation in commodity and energy prices, which can derail the growth prospects. Poor demand conditions, adverse movements in interest and exchange rates represent some of the risks and can affect profitability and growth.

The Company recognises these risks. As noted earlier (Box 4), It has devised an emergency preparedness plan and SOPs to deal with any future waves of the Covid-19 pandemic. Its past success in dealing with the pandemic gives it further confidence on the effectiveness of its approach. RVL also believes that the demand for electricity, being an essential service, will be relatively insulated from the crisis, thereby limiting its impact on the Company?s performance. As far as the other macroeconomic risks are concerned, it believes that the potential impact of this class of risks is contained given the size of its operations, low levels of debt and no direct exposure to foreign currency movements.

Operational Risks

Key operational risks include reliance on a limited number of clients and sectors, keeping up with technology and related advancements to stay competitive, need to attract and retain talent and ensure adequate employee utilisation to maintain profitability and monitoring customer satisfaction. This also includes risks arising out of possible failure to comply with laws and regulations or possible failure to successfully meet our contractual obligations including IT security and related services, leading to fines, penalties and lengthy litigations.

The Company addresses these risks through a well-structured framework which assigns ownership to monitor and mitigate the risks. It strives to expand its client-base beyond the Group as well as the power sector in the future. It believes its HR policies and processes effectively mitigate some of the employee related risks.

Regulatory Risks

The Company is subject to data privacy laws and related rules and regulations that could have material adverse effect on the business. It is also subject to labour laws and regulations governing its relationships with employees and contractors.

RVL is conscious of these risks and believes that its governance policies and procedures ensure transparency in operations, timely disclosures and adherence to regulatory compliances.

Cautionary Statement

The financial statements appearing above are in conformity with accounting principles generally accepted in India. The statements in the report which may be considered ‘forward looking statements? within the meaning of applicable laws and regulations, have been based upon current expectations and projection about future events. The management cannot, however, guarantee that these forward looking statements will be realised or achieved.

On behalf of the Board of Directors
Dr Sanjiv Goenka
Place : Kolkata Chairman
Date : May 13, 2022 DIN: 00074796