Incredible Bharat Incredible Bharat Tomorrow belongs to Bharat. 13th Annual Report 2013-2014 Incredible Bharat. It lives in us. Rel_AR2014_121114.indd 2-3 05/12/14 8:57 PM About 70% of India lives in Bharat. It is also where the true flavour and character of India resides. Charming, alluring and intriguing at the same time. As a country that’s often referred to as many countries in one, Bharat brings about the unity. Rel_AR2014_121114.indd 4-5 05/12/14 8:57 PM ‘Power to the last man in the chain, is key to tapping and nurturing the enormous potential of our Incredible Bharat. It is already happening as we speak. Pulsating like a heartbeat, more and more people are taking charge of their lives, protecting their futures and becoming self-reliant. Rel_AR2014_121114.indd 6-7 05/12/14 8:58 PM Sounds like the story of Incredible Bharat, sounds like the story of Reliance Life. Rel_AR2014_121114.indd 8-9 05/12/14 8:58 PM Power that is Bharat. Rel_AR2014_121114.indd 10-11 05/12/14 8:58 PM Inclusive development through technology, infrastructure and media penetration is unravelling the true potential of Bharat. Rel_AR2014_121114.indd 12-13 05/12/14 8:58 PM Looking beyond Tomorrow. Rel_AR2014_121114.indd 14-15 05/12/14 8:58 PM This evolution and progress needs to be safe and sustainable for every individual and his family. Long-term contractual savings habit is still to reach the masses. It requires face-to-face education and communication, on a regular basis. Rel_AR2014_121114.indd 16-17 05/12/14 8:58 PM Over 1 lakh people empowered. 1 crore futures secured. Rel_AR2014_121114.indd 18-19 05/12/14 8:58 PM Understanding of the intricate social fabric that defines Bharat, results in ideas that reach far and deep. We have a widespread, multi-layered network of over 1,00,000 advisors. Many of them belong to the rural areas. Together, we have touched the lives of over 1 crore people. Each one of them contributes to the emergent Bharat. Rel_AR2014_121114.indd 20-21 05/12/14 8:58 PM A friend, a guide and an insurance advisor. Rel_AR2014_121114.indd 22-23 05/12/14 8:58 PM The role of Reliance Life insurance advisors is of great significance. We hand-hold people at every step, involving them in the process through and through. For us, it’s not just about the number, but it’s also about the difference we make to people’s lives. Rel_AR2014_121114.indd 24-25 05/12/14 8:58 PM Insuring a person in a remote village. Rel_AR2014_121114.indd 26-27 05/12/14 8:58 PM Rel_AR2014_121114.indd 28-29 05/12/14 8:59 PM Together for a better tomorrow. Rel_AR2014_121114.indd 30-31 05/12/14 8:59 PM Reliance Life Management Team Through personalised training modules, soft skills enhancement and Just like a motivating work environment, we have managed to strengthen our partnerships - internal and external. Collaborating with Nippon was a step towards leveraging the Bharat, full potential of Reliance Life. Implementing advanced we bank on technologies, systems and Nippon Life’s Best Practices has given an added edge to the dynamism of our people. Reliance Life. Rel_AR2014_121114.indd 32-33 05/12/14 8:59 PM Evolving with Bharat. Rel_AR2014_121114.indd 34-35 05/12/14 8:59 PM 13TH ANNUAL REPORT - 2013-2014 Contents Corporate Information Foreword 39 Board of Directors Statutory Auditors Mr. Satya Pal Talwar (deceased on 9th August, 2013) M/s. Chaturvedi & Shah Message from Nippon Life 40 Mr. Rajendra Chitale Chartered Accountants Mr. Upendra Joshi Mr. Takeshi Furuichi M/s. Haribhakti & Co., Message from Reliance Capital 42 Mr. Soumen Ghosh Chartered Accountants Mr. Amit Bapna From Reliance Life CEO’s desk 44 Mr. Malay Kumar Ghosh Internal Auditors Mr. D. Varadarajan M/s. Aneja & Associates Mr. Anup Rau Directors’ Report and Corporate Governance Report 46 Chartered Accountants Management Discussion & Analysis Report 68 Board Committees (Mandatory) Bankers Audit and Compliance Committee HDFC Bank Risk Management and Asset Liability Management Financial Statements ICICI Bank Committee Standard Chartered Bank Investment Committee State Bank of India Management Report 86 Policyholders’ Protection Committee Deutsche Bank Corporate Social Responsibility Committee Auditors’ Report 92 With Profits Committee Nomination & Remuneration Committee Registered Office Revenue Account 96 H Block, 1st Floor, Management Team Dhirubhai Ambani Knowledge City, Kopar Khairane, Mr. Srinivasan Iyengar Profit & Loss account 98 Navi Mumbai – 400 710 Mr. S.V. Sunder Krishnan Mr. Sunil Agrawal Balance Sheet 100 Ms. Peuli Das Corporate Office Mr. Andleeb Rabbi 9/10th Floor, Building no. 2, Cash Flow Statement 102 Mr. Manoranjan Sahoo R-Tech Park, Nirlon Compound, Mr. Ramesh Viswanathan Next to Hub Mall, Behind Oracle Mr. Alok Kalra Schedules 104 Building, Goregaon (East), Mumbai – 400063 www.reliancelife.com Notes to Accounts 115 Company Secretary Ms. Puja Mehta 36 37 Rel_AR2014_121114.indd 36-37 05/12/14 8:59 PM Foreword Future belongs to India. With a population of over a billion, India is the world’s 4th largest economy. Our growth and development in the last 67 years since Independence has been remarkable. From self-sustainability in agriculture to significant improvements in life expectancy, literacy and the emergence of a powerful middle class, we have taken huge strides in the direction of sustainable development. The Indian markets promise a host of new opportunities - the largest and the youngest workforce, a massive wave of urbanisation that turns sleepy towns into bustling cities, and pioneering initiatives that transform challenges into opportunities for inclusive growth. We are learning to make the best use of our resources to find newer and more innovative ways to propel growth in smaller towns and cities. Today, India offers opportunities for growth across a variety of sectors and Life Insurance is seen to be one of the Industries that holds high potential for growth. India is the 10th largest Life Insurance Market out of 156 countries as per Swiss Re data for 2012 with a total premium of over `280,000 Crores as on 2013 -14 last financial year, employing over 23 lakh people, directly as employees or licensed advisors. The last decade has seen a significant 45% growth in the penetration of Life Insurance in India. From 2.2% of GDP in 2001, penetration of Life Insurance products has increased to 3.17% in 2012. The Life Insurance Industry has (Kept Intentionally Blank) come a long way with the addition of 23 private players, after 44 years of being a monopoly market. However, the true potential of the opportunity in Life Insurance is yet to be realized. We at Reliance Life, nurture the ambition of being a world-class life insurance player offering best-in-class products and services to our customers. Our initial growth was propelled by expansion of our operations, we believe the next phase of growth will be driven by quality of business, servicing capability, effective risk management and efficient distribution systems. To enable this next phase of growth, Reliance Life entered into a strategic partnership with Nippon Life of Japan in 2011. Headquartered in Osaka, Nippon Life Insurance is the largest private life insurer in Asia and the 7th largest in the world. The company is Fortune 100 Company with operations in Asia, North America and in Europe. Nippon Life, also known as Nissay, is a 125 year-old company. With over 14 million policies in Japan, the Company offers a wide range of products, including individual and group, life and annuity through various distribution channels and primarily uses a face-to-face sales process for distribution. As a strategic partner, Nippon Life brings vast experience, expertise and best practices in areas of product development, underwriting, investment management, distribution, customer relationship management and risk management. At Reliance Life, we hope to leverage our distribution network, brand name and the expertise of our Joint-Venture (JV) partner to expand the footprint of Life Insurance in India. A true mass-market player, Reliance Life has the largest branch network amongst private players with over 50% of its branches in semi-urban and rural areas sourcing close to 25% of its policies from the rural areas. For Reliance Life, the business opportunity lies in bringing Life Insurance to the interiors of the country. Bharat, where 70% of India resides, is also significantly under-insured. At the same time, it is here that progress is making rapid strides through the spirit of entrepreneurship and access to better technology. People of Bharat are moving towards being self-reliant in terms of employment opportunities and a better standard of living. Today, Bharat needs better access to financial solutions for protection of life & assets and for savings to keep up the momentum of progress and provide impetus for future growth. Life insurance plays a crucial role in this context. Indians need to be educated about the importance of Life Insurance - it is not just an investment, it is in fact, a legacy that they would leave behind for posterity so that, their family’s progress continues uninterrupted. The way forward for us is simple yet arduous. We are committed to getting India insured at every level - from the grassroots to the urban high rises, creating long-term financial independence for our customers, which in turn will lead to sustainable and profitable growth for us as a business. 39 Rel_AR2014_121114.indd 38-39 05/12/14 8:59 PM 13TH ANNUAL REPORT - 2013-2014 Message from Nippon Life OUR STRATEGIC TIE-UP WITH RELIANCE LIFE As Nippon Life and Reliance Life enter into their fourth year of strategic partnership in 2014, I will always remember At the Reliance Life tie-up Signing Ceremony, I handed a fountain pen made of a 3,000-year old cedar tree to that we announced plans to obtain 26% of Reliance Life’s stock just after the Great East Japan Earthquake, on Chairman, Anil Ambani, and I said to him “let‘s build a partnership that will last for at least 3,000 years, like this March 14, 2011.