Reliance Industrial Infrastructure - Annual Report 2008-2009

RELIANCE INDUSTRIAL INFRASTRUCTURE LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

To
The Members

Dear Members,

Your Directors are pleased to present the 21st Annual Report and the
Audited Accounts for the financial year ended 31st March, 2009.

Financial Results:

The financial performance of the Company for the financial year ended 31st
March, 2009 is summarised below:

(Rs. in Crore)

2008-2009 2007-2008

Gross Profit before
interest and
depreciation 41.53 38.51

Less : Interest 2.14 2.84

Depreciation 5.44 6.41

Less : Transfer from
Revaluation Reserve 0.86 1.08

4.58 5.33

Profit before Tax 34.81 30.34

Less : Provision for
Taxation:

- Current Tax 3.88 3.40

- Fringe Benefit Tax 0.07 0.06

- Deferred Tax 8.39 5.09

12.34 8.55

Profit after Tax 22.47 21.79

Add : Balance in
Profit and Loss Account 24.24 18.63

Amount Available for
Appropriation 46.71 40.42

Appropriations:

General Reserve 17.14 10.00

Dividend on Equity
Shares 5.28 5.28

Tax on Dividend 0.90 0.90

Balance carried to
Balance Sheet 23.39 24.24

46.71 40.42

Dividend:

Your Directors have recommended a dividend of Rs. 3.50 per Equity Share
(last year Rs.3.50 per Equity Share) on 1,51,00,000 Equity Shares of
Rs.10/- each for the financial year ended 31st March, 2009, which, if
approved at the ensuing Annual General Meeting, will be paid to those
Members whose names appear in the Company's Register of Members on 16th
August, 2009; in respect of shares held in dematerialised form, it will be
paid to members whose names are furnished by National Securities Depository
Limited and Central Depository Services (India) Limited as beneficial
owners as on that date.

The total cash outflow on account of this dividend including distribution
tax will be Rs. 6.18 crore. The Company has consistently paid dividend
since the financial year 1991-92.

Management Discussion and Analysis:

Financial and Operational Review :

The Company has earned a gross income of Rs.79.02 crore for the financial
year 2008-09, as compared to Rs.80.13 crore in the previous year.

The Company has earned a higher gross profit of Rs.41.53 crore for the year
as against Rs.38.51 crore in the previous year, showing an increase of
7.84% over the previous year. The Company has also earned a higher net
profit of Rs.22.47 crore for the year as compared to Rs.21.79 crore in the
previous year, showing an increase of 3.12% over the previous year.

Interest expenditure for the year under review has decreased to Rs.2.14
crore from Rs.2.84 crore in the previous year.

Depreciation during the year was lower at Rs.4.58 crore as compared to
Rs.5.33 crore in the previous year.

Return on equity is lower at 14.5% as compared to 15.6% in the previous
year and return on capital employed was 18.8% as compared to 13.6% in the
previous year.

Earnings per Share is Rs.14.88 as compared to Rs.14.43 in the previous
year.

Resources and Liquidity:

The debt to equity ratio of the Company is 0.15:1 as at 31st March, 2009 as
compared to 0.40:1 as at 31st March, 2008. The Company's long term debt is
Rs. 25 crore as on 31st March, 2009 as compared to Rs. 35 crore as on 31st
March, 2008.

The Company's net worth as on 31st March, 2009 was Rs.166.68 crore, with
paid-up capital of Rs.15.10 crore and accumulated reserves and surplus of
Rs.151.58 crore as compared to the net worth as on 31st March, 2008 of
Rs.151.25 crore, with paid-up capital of Rs.15.10 crore and accumulated
reserves and surplus of Rs.136.15 crore.

Industry Structure and Developments:

The strong population growth in India and its booming economy are
generating enormous pressures to modernise and expand the country's
infrastructure. Infrastructure is the basis of economic activity. India's
annual GDP growth could be faster but for the shortcomings in its
infrastructure. All economic sectors can benefit from more comprehensive
infrastructure in the country. Infrastructure sector mainly consists of
assets and services such as urban infrastructure, road transport, ports,
airport and other utilities.

The Government of India is keen to address this and is committed to
economic reforms to stimulate the development of basic infrastructure to
improve the lives of the urban and rural population and to boost the
economy. Its goal is to close the gap with the other emerging economies
within the next few years, so the development of infrastructure has a high
priority in the Eleventh Five Year Plan.

Opportunities:

The Indian Government has evidently realised both the importance of the
infrastructure sector and the necessity of attracting foreign capital, as
FDI regulations have been relaxed over the past few years. The 'macro
story' of an investment in India's infrastructure is - robust population
growth, strong economic growth and significant backlog demand.

Outlook:

The Company is confident that the present environment of investments in
infrastructure by the State and Central Governments assures sustenance of
operations going forward, and possibility to maintain the growth rates
achieved in earlier years.

Challenges, Risks and Concerns:

The Company faces normal business challenges of market competition in its
business and need to continuously seek attractive growth opportunities.
Competition from the existing and emerging local and International players
continues to pose challenges to the domestic markets. The Company has to
reckon with aggressive strategies from the new entrants in the market.

Capacity and capability enhancement, operational excellence, growth and
cost optimisation are some of the thrust areas identified by the Company to
overcome new challenges.

As a part of the overall risk management strategy, the Company consistently
insures its assets and generally follows a conservative financial profile
by following prudent business practices.

Internal Controls:

The Company has a proper and adequate internal control system commensurate
with its nature of business and meets the following objectives:

* Providing assurance regarding the effectiveness and efficiency of
operations;

* Efficient use and safeguarding of resources;

* Compliance with policies, procedures and applicable laws and regulations;
and

* Transactions being accurately recorded and promptly reported.

The Company also has budgetary control system to monitor expenditures
against approved budgets on an ongoing basis. The Audit Committee of the
Board of Directors regularly reviews the adequacy of internal control
system.

Human Resource Development:

The Company has a team of able and experienced professionals. The Company
believes that the quality of its employees is the key to its success in the
long run. The Company continues to have cordial relations with its
employees. It employs 140 persons and provides personal development
opportunities and all round exposure to them.

Subsidiaries:

During the year, Reliance Corporate Centre Limited and Reliance Convention
and Exhibition Centre Limited have become subsidiaries of the Company.

Ministry of Corporate Affairs, Government of India, vide order
No.47/317/2009-CL-III dated 29th April, 2009, has granted approval that the
requirement to attach various documents in respect of subsidiary companies,
as set out in sub-section (1) of Section 212 of the Companies Act, 1956,
shall not apply to the Company. Accordingly, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not being
attached with the Balance Sheet of the Company. Financial information of
the subsidiary companies, as required by the said order, is disclosed in
the Annual Report. The Company will make available the Annual Accounts of
the subsidiary companies and the related detailed information to any member
of the Company who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open for inspection
by any investor at the Registered Office of the Company and that of the
respective subsidiary companies.

Directors:

Shri Bharat C. Gosalia resigned from the office of Director of the Company
with effect from 19th January, 2009. Shri Gosalia joined the Board of the
Company on 22nd March, 1997. He was appointed as a Whole-time Director
designated as Executive Director and President of the Company with effect
from 1st July, 1997. He held this position till 30th June, 2005.
Thereafter, he continued on the Board of the Company as a Director liable
to retire by rotation. The Board wishes to place on record its immense and
sincere appreciation for the valuable guidance and contribution rendered by
Shri Bharat C. Gosalia, during his tenure as Director of the Company.

In terms of Article 143 of the Articles of Association, Shri Mahesh K.
Kamdar retires by rotation and being eligible, offers himself for re-
appointment at the ensuing Annual General Meeting.

The term of office of Shri Dilip V. Dherai expired on 30th June, 2009. The
Board of Directors has re-appointed Shri Dilip V. Dherai as a Whole-time
Director of the Company designated as Executive Director for a further
period of 5 years with effect from 1st July, 2009.

Brief Resume of the Directors proposed to be re-appointed, nature of their
expertise in specific functional areas and names of companies in which they
hold directorships and memberships/chairmanships of Board Committees, their
shareholding and relationships between them inter-se, as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchanges, are provided
in the Report on Corporate Governance forming part of the Annual Report.

Group:

Pursuant to an intimation from the Promoter i.e. Reliance Industries
Limited, the names of the Promoters and entities comprising the group' as
defined in the Monopolies and Restrictive Trade Practices (MRTP') Act,
1969, are disclosed in the Annual Report of the Company for the purpose of
the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997, is provided in the Report on
Corporate Governance forming part of the Annual Report.

Directors' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, it is hereby
confirmed that:

i. in the preparation of the accounts for the financial year ended 31st
March, 2009, the applicable accounting standards have been followed and
that there are no material departures from the same;

ii. the Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at 31st March, 2009 and of the profit of the Company for the
year ended on that date;

iii. the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
and

iv. the Directors have prepared the accounts for the financial year ended
31st March, 2009 on a 'going concern' basis.

Auditors:

Messrs Chaturvedi & Shah, Chartered Accountants, Statutory Auditors of the
Company hold office until the conclusion of the ensuing Annual General
Meeting and are eligible for re-appointment.

The Company has received a letter from them to the effect that their re-
appointment, if made, would be within the limits prescribed under Section
224(1B) of the Companies Act, 1956 and that they are not disqualified for
such re-appointment within the meaning of Section 226 of the said Act.

Consolidated Financial Statements:

In accordance with the Accounting Standard AS-21 on Consolidated Financial
Statements read with Accounting Standard AS-23 on Accounting for
Investments in Associates, your Directors provide the audited Consolidated
Financial Statements in the Annual Report.

Secretarial Audit Report:

As a measure of good corporate practice, the Board of Directors of the
Company appointed Dr. K. R. Chandratre, Practicing Company Secretary, to
conduct Secretarial Audit of the Company. The Secretarial Audit Report for
the financial year ended 31st March, 2009, is provided in the Annual
Report.

The Secretarial Audit Report confirms that the Company has complied with
all the applicable provisions of the Companies Act, 1956, the Depositories
Act, 1996, the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997, the Securities and
Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992
and the Listing Agreement with the Stock Exchanges.

Particulars of Employees:

In terms of the provisions of Section 217(2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules, 1975.

However, having regard to the provisions of Section 219(1)(b)(iv) of the
said Act, the Annual Report excluding the aforesaid information is being
sent to all the Members of the Company and others entitled thereto. A
member interested in obtaining such particulars may write to the Company
Secretary at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings
and Outgo:

The particulars relating to energy conservation, technology absorption and
foreign exchange earnings and outgo, as required to be disclosed under
Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988
(the 'Rules') are as under:

i. Part A and B of the Rules, pertaining to Conservation of Energy and
Technology Absorption, are not applicable to the Company.

ii. Foreign Exchange Earnings and Outgo:

Earnings - Rs. Nil
Outgo - Rs. 32.17 crores

Transfer of Unclaimed and Unpaid amounts to Investor Education and
Protection Fund:

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956,
the declared dividends which remained unclaimed and unpaid for a period of
7 years have been transferred by the Company to the Investor Education and
Protection Fund established by the Central Government pursuant to Section
205C of the said Act.

Corporate Governance:

The Company is committed to maintain the highest standards of Corporate
Governance. Your Directors adhere to the requirements set out in the
Listing Agreement with the Stock Exchanges and have implemented all the
stipulations prescribed.

The Report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement with the Stock Exchanges forms part of the Annual Report.

The declaration regarding compliance with the Company's Code of Business
Conduct and Ethics for Directors and Management Personnel forms part of the
Report on Corporate Governance.

The requisite Certificate from the Auditors of the Company, Messrs
Chaturvedi & Shah, confirming compliance of the conditions of Corporate
Governance as stipulated under the aforesaid Clause 49, is annexed to this
Report.

Acknowledgement:

Your Directors would like to express their grateful appreciation for
assistance and co-operation received from the Government, Banks, other
Business constituents and Members during the year under review.

Your Directors also wish to place on record their deep sense of
appreciation for the committed services of the Employees of the Company.

For and on behalf of the Board of Directors

Mahesh K. Kamdar
Chairman

Place : Mumbai,
Date : 30th July, 2009