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Accounting Policies of Satin Creditcare Network Ltd. Company

Mar 31, 2017

NOTE NO. 1 GENERAL INFORMATION

Satin Creditcare Network Limited ("The Company") is a public limited company and incorporated under the provisions of the Companies Act and having its registered office at New Delhi, India. The Company is a non-deposit accepting Non-Banking Financial company (''NBFC-ND'') and is registered as a Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI'') with the Reserve Bank of India ("RBI") in November 2013. The Company is engaged primarily in providing micro finance services to women in the rural areas of India who are enrolled as members and organized as Joint Liability Groups (''JLG'').

NOTE NO. 2 SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements

The financial statements have been prepared under historical cost convention in accordance with the generally accepted accounting principles and the applicable accounting standards notified under Section 133 of the Companies Act,2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provision of the Companies Act, 2013 as applicable and the guidelines issued by the Reserve Bank of India. Accounting policies have been consistently applied except where a newly issued accounting standard or a guideline is initially adopted or a revision to the existing accounting standard requires a change in the accounting policy hitherto in use. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current, noncurrent classification of assets and liabilities.

b) Use of Estimates

The preparation of financial statements is in conformity with the Indian Generally Accepted Accounting Principles (GAAP) and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liability) and the reported amounts of revenues and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. The actual results could differ from these estimates and the differences between the actual results and the estimates are recognized in the years in which the results are known / materialize and their effects disclosed in the notes to the financial statements.

c) Cash and Cash Equivalents (for the purpose of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

d) Tangible Assets - Property, plant and equipments

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of a tangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Tangible assets acquired on account of amalgamation are stated at the acquisition value agreed in the amalgamation agreement.

Capital work in progress:

Capital work in progress are carried at cost, comprising direct cost, related incidental expenses and advances paid to acquire fixed assets. Assets which are not ready to intended use are also shown under capital work in progress.

e) Intangible Assets

Intangible assets are carried at cost of acquisition less amortization. Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific asset to which it relates.

Intangible assets are amortized in the Statement of Profit and Loss over their estimated useful lives from the date they are available for use based on the expected pattern of consumption of economic benefits of the asset. Intangible asset is being amortized over a period of 3 years using written down value method.

Assets which are not ready for their intended use are shown as Intangible assets under development which comprises of all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management.

1) Depreciation/Amortization

Depreciation on tangible assets is provided on the written-down method using the rates arrived at based on the useful lives of assets prescribed under Schedule II of the Companies Act, 2013 which is also at par with the useful life of the assets estimated by the management. Depreciation is calculated on pro rata basis from the date on which the asset is ready for use or till the date the asset is sold or disposed. Losses arising from retirement or gains or losses arising from disposal of fixed assets are recognized in the Statement of Profit and Loss.

Intangible assets are amortized over their respective individual estimated useful lives on a written-down basis, commencing from the date the asset is available to the Company for its use.

Assets

Useful Life as per Schedule II (years)

Building

60 years

Plant & Machinery

5 -15 years

Office Equipment

5 years

Computer Equipment

3 years

Furniture & Fixture

10 years

Vehicles

8-10 years

The estimated useful life of the assets is reviewed at the end of each financial year and the amortization and depreciation method are revised, if necessary.

g) Impairment

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. The recoverable amount of an asset is the greater of its value in use and its net selling price. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceed its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transaction is taken into account, if available. If no such transaction can be identified, an appropriate calculation model is used.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

h) Investments

(i) Investments that are readily realizable and are intended to be held for not more than one year from the date, on which these investments are made, are classified as current investments. All other investments are classified as Long term investments.

(ii) The Company values its Investments based on the accounting standard issued by the Institute of Chartered Accountants of India as under:

(a) Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments.

(b) Current investments are carried at lower of cost or fair value.

i) Trade receivables

Trade Receivables includes outstanding amounts pertaining to other services/activities undertaken by the Company. j) Portfolio loans

Portfolio Loans have been classified as short term and long term loans & advances according to their tenure. k) Revenue Recognition

(i) The Reserve Bank of India''s prudential norms on income recognition and provisioning for bad and doubtful debts

has been followed.

(ii) Subject to the above, specific incomes have been accounted for as under:

(a) Interest income on loans is recognized under the internal rate of return method on accrual basis except in the case of non-performing assets where it is recognized upon realization and any such income recognized before the asset became non-performing and remaining unrealized is reversed.

(b) Interest income on fixed deposits with bank is recognized on a time proportion accrual basis taking into account the amount outstanding and the interest rate applicable.

(c) Processing fee collected on loans disbursed are recognized at the inception of the loan.

(d) In accordance with the RBI Guidelines, the Company accounts for any loss arising from assignment/ securitization of standard assets immediately at the time of sale and the profit/ premium arising from securitization is amortized over the life of the underlying portfolio loans/ securities. Income from interest strip (excess interest spread) is recognized in the Statement of Profit and Loss net of any losses when redeemed in cash.

(e) Penal interest and charges are accounted as and when realized in respect of SME Loans.

(f) All other income is recognized on an accrual basis, when there is no uncertainty in the ultimate realization / collection.

l) Asset Classification and Provisioning Norms

a) Assets Classification

Loans to Customers are classified as Standard and Non-performing assets, based on the criteria laid down below:

Asset Classification

Criteria

Standard assets

The asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any problem nor carry more than normal risk attached to the business;

Non-Performing assets

An asset for which, interest/principal payment has remained overdue for a period of 90 days or more.

b) Provisioning Norms

(i) Provisioning Norms for MFI Loan Portfolio:

The aggregate loan provision maintained by the Company at any point of time shall not be less than the higher of 1.75% of the outstanding loan portfolio including securitization or 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of the aggregate loan installments which are overdue for 180 days or more.

The above-mentioned provisioning policy is as per the provision policy prescribed in the NBFC-MFI Directions. These Directions require the total provision for loan portfolio to be higher of (a) l% of the outstanding loan portfolio or (b) 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of the aggregate loan installments which are overdue for 180 days or more.

(ii) Provisioning Norms for SME Loans:

m) Borrowing Costs

Borrowing cost, which are directly attributable to the acquisition /construction of fixed assets, till the time such assets are ready for intended use, are capitalized.

Borrowing cost consists of interest and other costs that the Company incurred in connection with borrowing of the funds. Other incidental borrowing costs namely Processing Fee, Due Diligence charges and Stamp duty charges are amortized over the period of the loan in equal monthly installment. All other borrowing costs other than mentioned above are expensed in the period they are incurred. In case any loan is prepaid/cancelled then the unamortized borrowing cost, if any, is fully expensed off on the date of prepayment/cancellation. In case an unamortized identified borrowing cost is outstanding at the year end, it is classified under loans and advances as unamortized cost of borrowings.

n) Foreign Currency

(i) Transactions in foreign currency entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction.

(ii) Foreign currency monetary items of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.

(iii) Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or expense in the Statement of Profit and Loss.

o) Share /Debenture Issue Expenses

All expenses pertaining to issue of share capital (both equity and preference share capital) and debentures are adjusted against the Securities Premium Reserve Account to the extent any balance is available for utilization in the Securities Premium Reserve Account. Share/Debenture issue expenses in excess of the balance in the Securities Premium Reserve Account are expensed in the Statement of Profit and Loss.

p) Provisions and Contingent Liabilities

A provision is recognized when the Company has a present obligation as a result of past events and it is probable that there will be an outflow of resources to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Further the company being a NBFC-MFI also complies with the guidelines issued by the Reserve Bank of India regarding the various provisioning norms.

A Contingent liability is a possible obligation arising from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent Assets are neither recognized nor disclosed in the financial statements.

q) Employees Retirement Benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences.

(i) Short-term employee benefits

Short term benefits including salaries, short term compensated absences (such as a paid annual leave) where the absences are expected to occur within twelve months after the end of the period in which the employees render the related service, profit sharing and bonuses payable within twelve months after the end of the period in which the employees render the related services and non-monetary benefits for current employees are estimated and measured on an undiscounted basis.

(ii) Defined Contribution Plan

Company''s contributions to Provident Fund, Pension Fund and Employee State Insurance Scheme are charged as expense based on the amount of contribution required to be made and when services are rendered by the employees.

(iii) Defined Benefit Plan

Liabilities for gratuity funded in terms of a scheme administered by the Life Insurance Corporation of India, are determined by actuarial valuation on Projected Unit Credit Method made at the end of each Balance Sheet date and provision for liabilities pending remittance to the fund is carried in the Balance Sheet.

(iv) Long term employee benefits

Compensated absences which are not expected to occur within 12 months after the end of period in which the employee rendered the related services are provided for based on actuarial valuation carried out at the end of the financial period using projected unit Credit Method. Past services cost is recognized immediately to the extent that the benefits are already used and otherwise is amortized on straight line base over the average period unit the benefits become vested. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefits obligation as adjusted for unrecognized past service cost, as redeemed by the fair value of scheme assets.

Actuarial gains / losses are immediately taken to the statement of profit and loss and are not deferred.

r) Taxation

Tax expense for the period, comprising of current tax and deferred tax are included in the determination of the net profit or loss for the period.

(i) Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961.

(ii) Excess/short provision of income tax relating to earlier years is disclosed separately in the accounts.

(iii) Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one year and are capable of reversal in one or more subsequent years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.

s) Earnings Per Share

Basic earnings per share are computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the year, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each year presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

t) Employee Stock Option Scheme (''ESOP'')

The Company has formulated an Employees Stock Option Schemes to be administered through a Trust. The scheme provides that subject to continued employment with the company, employees of the Company are granted an option to acquire equity shares of the company that may be exercised within a specified period. The company follows the intrinsic value method for computing the compensation cost for all options granted which will be amortized over the vesting period. Measurement and disclosure of the employee share-based payment schemes are done in accordance with Securities and Exchange Board of lndia (Share Based Employee Benefits) Regulations, 2014 and the Guidance Note on Accounting for Employee Share based Payments, issued by the Institute of Chartered Accountants of India.

The difference between the intrinsic value of the stock option granted and the exercise price, if any, is expensed as "Employee Compensation" over the period of vesting.

u) Leases

Lease arrangements where the significant portion of the risks and rewards of ownership vests with the Lessor are recognized as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the period of lease.

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value of the leased property and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets.

v) Operating Cycle

Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.


Mar 31, 2016

Note No.l General Information

Satin Creditcare Network Limited ("The Company") is a public limited company and incorporated under the provision of the
Companies Act, 1956. The Company is a non deposit accepting micro finance non banking financial company, registered as NBFC-MFI
with The Reserve Bank of India ("RBI").The Company is engaged in the micro-finance activities.

Note No.2 Significant Accounting Policies

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under historical cost convention in accordance with the generally accepted accounting
principles and the applicable accounting standards notified under Section 133 of the Companies Act,2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and relevant provision of the Companies Act, 2013 as applicable and the guidelines issued by the
Reserve Bank of India. Accounting policies have been consistently applied except where a newly issued accounting standard or a
guideline is initially adopted or a revision to the existing accounting standard requires a change in the accounting policy
hitherto in use. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule III to the
Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current, non- current
classification of assets and liabilities.

2. USE OF ESTIMATES

The preparation of financial statements is in conformity with the Indian Generally Accepted Accounting Principles (GAAP) and
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized
prospectively in current and future periods. Changes in estimates are reflected in the financial statements in which changes are
made and their effects disclosed in the notes to the financial statements.

3. TANGIBLE ASSETS

All Tangible assets owned by the Company are stated at historic cost less accumulated depreciation. Tangible assets acquired on
account of amalgamation are stated at the acquisition value agreed in the amalgamation agreement. Capital work in progress
comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not ready for their intended
use as at the Balance sheet date.

4. INTANGIBLE ASSETS

Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less
accumulated depreciation and impairments. Computer software cost are capitalized and amortised as prescribed in Schedule II of
Companies Act 2013.

5. DEPRECIATION/AMORTISATION

Depreciation on tangible assets is provided on the Written-down method over the useful lives of assets estimated by the
Management. Depreciation for assets purchased/sold during a period is proportionately charged. Intangible assets are amortized
over their respective individual estimated useful lives on a written-down basis, commencing from the date the asset is available
to the Company for its use. The Management estimates the useful lives of the fixed assets as follows and which is also the useful
lives of the assets based on the Part C of the Schedule II of the Companies Act 2013:

Depreciation and amortisation methods, useful lives and residual values are reviewed at each financial year end.

6. IMPAIRMENT

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An
asset''s recoverable amount is the higher of an asset''s net selling price and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or group of assets. Where the carrying amount of an asset exceed its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. In determining net selling price, recent market transaction are taken into account, if available. If
no such transaction can be identified, an appropriate calculation model is used.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

7. INVESTMENTS

(i) Investments that are readily realizable and are intended to be held for not more than one year from the date, on which these
investments are made, are classified as current investments. All other investments are classified as Long term investments.

(ii) The Company values its Investments based on the accounting standard issued by the Institute of Chartered Accountants of
India as under:

a. Investment held as long-term investments is valued at cost. Provision for diminution in value is not made unless there is a
permanent fall in their net realizable value.

b. Current investments are valued at lower of cost or net realizable value.

8. CURRENT ASSETS

A. TRADE RECEIVABLES:

Trade Receivables includes outstanding amounts pertaining to other services/activities undertaken by the Company.

B. PORTFOLIO LOANS:

Portfolio Loans have been classified as short term and long term loans & advances according to their tenure.

C. CASH & CASH EQUIVALENT:

Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash on hand, demand deposits with banks and other
short term highly liquid assets that are readily convertible into known amounts of cash and which are subject to insignificant
risk of changes in value.

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the
effects of transactions of non-cashnature and any deferrals or accruals of pastor future cash receipts or payments. The cash
flows from operating, investing and financing activities of the Company are segregated based on the information.

9. REVENUE RECOGNITION

(i) The Reserve Bank of India''s prudential norms on income recognition and provisioning for bad and doubtful debts has been
followed.

(ii) Subject to the above, specific incomes have been accounted for as under:

a. Interest income on loans is recognized under the internal rate of return method on accrual basis except in case of
non-performing assets where it is recognized upon realization as per RBI norms.

b. Interest income on deposits with bank is recognized on a time proportion accrual basis taking into account the amount
outstanding and the rate applicable.

c. Loan processing fee is recognized as income on accrual basis.

d. Profit on securitization of loan portfolio through bankruptcy remote Special Purpose Vehicle (SPV) is recognized over the
residual life of the securitization transaction in terms of RBI Guidelines. Profit on sale of loan assets through direct
assignment, without any recourse obligation or otherwise is amortized over the residual life of the loan.Net loss, if any,
arising on account of securitization and direct assignment of loan assets is recognized immediately at time of sale.

e. Any other Income is accounted for as and when accrued.

10. ASSET CLASSIFICATION AND PROVISIONING NORMS

The Company being a NBFC-MFI adopts the following norms based on the guidelines/instructions issued by the Reserve Bank of
India:-

Asset Classification Norms:-

(i) Standard asset means the asset in respect of which no default in repayment of principal or payment of interest is perceived
and which does not disclose any problem nor carry more than normal risk attached to the business;

(ii) Non Performing asset means an asset for which interest/principal payment has remained overdue for a period of 90 days or
more.

Provisioning Norms:-

The aggregate loan provision is maintained by the Company at any point of time shall not be less than the higher of:-

a) 1% of the outstanding loan portfolio, or

b) 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of the
aggregate loan installments which are overdue for 180 days or more.

11. BORROWING COSTS

Borrowing costs, which are directly attributable to the acquisition /construction of fixed assets, till the time such assets are
ready for intended use, are capitalized as a part of the cost of assets.

Borrowing costs consist of interest and other borrowing costs that the Company incurred in connection with borrowing of the
funds. Interest cost is expensed off on the accrual basis. Other incidental borrowing costs namely Processing Fee, Due Diligence
charges and Stamp duty charges are amortized over the period of the loan in equal monthly installment. All other borrowing costs
other than mentioned above are expensed in the period they are incurred. In case any loan is prepaid/cancelled then the
unamortized borrowing cost, if any, is fully expensed off on the date of prepayment/cancellation. In case an unamortized
identified borrowing cost is outstanding at the year end, it is classified under loans and advances as unamortized cost of
borrowings.

12. FOREIGN CURRENCY

Transactions in foreign currency are recorded at the rates of exchange prevalent on the date of transaction. Exchange difference,
if any, arising from foreign currency transaction are dealt in the Statement of Profit & Loss at year end rates. Monetary items
(Payables, loans etc.) denominated in foreign currency are reported using the closing exchange rate on each Balance Sheet date.

13. SHARE/DEBENTURE ISSUE EXPENSES

All expenses pertaining to issue of share capital(both equity and preference share capital) and Debentures are adjusted/written
off with Securities Premium Reserve Account, if any, after the date of allotment as per the provisions of the Companies Act,
2013.

14. PROVISIONS AND CONTINGENT ASSETS/LIABILITIES

Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result
of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of
the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.
Further the company being aNBFC-MFI also complies with the guidelines issued by the Reserve Bank of India regarding the various
provisioning norms.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the
Company or a present obligation that arises from past events where it is either not probable that the outflow of resources will
be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability. Contingent
liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.

15. EMPLOYEES RETIREMENT BENEFITS

Employee benefits includes provident fund, employee state insurance scheme, gratuity fund and compensated absences.

a) Short-term employee benefits including Salaries, short term compensated absences (such as a paid annual leave) where the
absences are expected to occur within twelve months after the end of the period in which the employees render the related
service, profit sharing and bonuses payable within twelve months after the end of the period in which the employees render the
related services and non-monetary benefits for current employees are estimated and measured on an undiscounted basis.

b) Defined Contribution Plan

Company''s contribution paid / payable during the year to Provident Fund, Pension Fund and Employee State Insurance Scheme are
recognized in the statement of Profit and Loss based on amount of contribution required to be made and when services are rendered
by the employees.

c) Defined Benefit Plan

Liabilities for gratuity funded in terms of a scheme administered by the Life Insurance Corporation of India, are determined by
actuarial valuation on Projected Unit Credit Method made at the end of each Balance Sheet date, provision for liabilities pending
remittance to the fund is carried in the Balance Sheet.

d) Long term employee benefits

Liability for compensated absences is provided based on actuarial valuation carried out at the end of the financial period using
projected unit Credit Method and is not funded. Past services cost is recognized immediately to the extent that the benefits are
already used and otherwise is amortized on straight line base over the average period unit the benefits become vested. The
retirement benefits obligation recognized in the balance sheet represents the present value of the defined benefits obligation as
adjusted for unrecognized past service cost, as redeemed by the fair value of scheme assets.

Compensated absences which are not expected to occur within 12 months after the end of period in which the employee rendered the
related services are recognized as a liability at the present value of the defined benefits obligation as at the balance sheet
date.

Actuarial gains and losses are recognized immediately in the statement of Profit and Loss as income or expense in the period in
which they occur. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the Balance Sheet date on Government bonds.

16. TAXATION

Tax expense for the period, comprising of current tax and deferred tax are included in the determination of the net profit or
loss for the period.

(i) Current tax expense is made based on the estimated tax liability as per the appropriate provisions of the Income Tax Act,
1961

(ii) Excess/short provision of income tax relating to earlier years is disclosed separately in the accounts.

(iii) Deferred Tax Assets and Liabilities reflect the impact of timing differences between tax profit and book profit and is
accounted for using the tax rates and laws that have been enacted or substantially enacted as on balance sheet date. Deferred
Tax Assets are recognized to the extent there is reasonable certainty that sufficient future taxable income will be available
against which these assets can be realized. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets,
if any.

17. EARNING PER SHARE

In determining earning per share, the Company considers the net profit after tax and includes the post tax effect of any
extra-ordinary/exceptional item. The number of shares used in computing basic earning per share is the weighted average number of
shares outstanding during the period. The number of shares used in computing diluted earning per share comprises the weighted
average shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could
have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair value. Dilutive potential equity shares are deemed converted
at the beginning of the period, unless issued at a later date. The number of shares and potential dilutive equity shares are
adjusted for any stock splits and bonus shares issued effected prior to the approval of the financial statements by the board of
directors.

18. EMPLOYEE STOCK OPTION SCHEME (ESOS)

The Company has formulated Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Guidelines, 1999) as amended from time to time. These schemes provide for grant of options to employees
of the Company that vest in a graded manner and that are to be exercised within a specified period. Further, the new guidelines
by Securities and Exchange Board of India (SEBI) came into force i.e. SEBI (Share Based Employee Benefit) Regulations, 2014 (new
regulation) according to which certain modification were required to be made in the trust deed formulated under SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Guidelines, 1999). As a result of new Regulations coming into effect, the earlier
SEBI (Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999) Guidelines have been repealed. With the
evolution of new SEBI Law, the existing Employee Welfare Trust need was realigned, so as to abide by the requirements of the new
Regulations floated by the Market Regulator. Measurement and disclosure of ESOS is done in accordance with new regulation,
circulars/notifications issued by SEBI, from time to time and guidance note on Accounting for employee share based payments
issued by The Institute of Chartered Accountants of India.

The Company measures compensation cost relating to employee stock schemes accordingly as per the guidance note. The compensation
expense is recognized over the vesting period of the options..

19. LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the Lessor are classified as
operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis
over the period of lease.

Lease in which substantially all the risks and benefits incidental to ownership of leased assets are transferred to the Company
are classified as finance lease. Finance leases are capitalized at the inception of the lease at the lower of the fair value of
the leased asset and the present value of the minimum lease payments.

20. OPERATING CYCLE

Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash
or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets
and liabilities as current and non-current.


Mar 31, 2015

1. General Information

Satin Credit care Network Limited ("The Company") is a public limited company and incorporated under the provision of the Companies Act, 1956. The Company is a non deposit accepting micro finance non banking financial company, registered as NBFC-MFI with The Reserve Bank of India ("RBI").The Company is engaged in the micro-finance activities.

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under historical cost convention in accordance with the generally accepted accounting principles and the applicable accounting standards notified under Section 133 of the Companies Act,2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provision of the Companies Act, 2013 as applicable and the guidelines issued by the Reserve Bank of India. Accounting policies have been consistently applied except where a newly sieved accounting standard or a guideline is initially adopted or a revision to the existing accounting standard requires a change in the accounting policy hitherto in use. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current, non-current classification of assets and liabilities.

2 USE OF ESTIMATES

The preparation of financial statements is in conformity wit h the Indian Generally Accepted Accounting Principles (GAAP) and requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospective!)1 in current and future periods. Changes in estimates are reflected in the financial statements in which changes are made and their effects disclosed in the notes to the financial statements.

3. TANGIBLE ASSETS

All Tangible assets owned by the Company are stated at historic cost less accumulated depreciation. Tangible assets Juiced mi account of amalgamation are stated at the acquisition value agreed in die amalgamation agreement. Capital work in progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not ready for their intended use as at the Balance sheet date.

4. INTANGIBLE ASSETS

Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated depreciation and impairment s. Computer software cost are capitalized and amortised as prescribed in Schedule II of Companies Act 2013.

5. DEPRECIATION

Depreciation on tangible assets is provided on the Written-down method over the useful lives of assets estimated by the Management. Depreciation for assets purchased/sold during a [triad is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives on a written-down basis, commencing from the date the asset is available to the Company for its use. The Management estimates the useful lives for the other fixed assets as follows:

The useful lives of the assets has been based on the Part C of the Schedule II of the Companies Act, 2013.Depreciation and amortisation methods, useful lives and residual values are reviewed at each financial year end.

6. INVESTMENTS

(i) Investments that are readily realizable and are intended to be held for not more than one year from the date, on which these investments are made, are classified as current investments. All other investments are classified as Long term investments.

(ii) The Company values its Investments based on the accounting standard issued by the Institute of Chartered Accountants of Indians under:

a. Investment held as long-term investments is valued at cost. Provision for diminution in value is not made unless there is a permanent fall in their net realizable value.

b. Current investments are valued at lower of cost or net realizable value.

7. CURRENT ASSETS

A. Trade Receivables:

Loan portfolio comprises of Trade receivables under finance contracts with the borrowing as on the Balance Sheet date.

B. Cash and Cash Equivalents:

Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash on hand, demand deposits with banks and other short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

Cash flows are reported using the indirect method whereby profit / (loss) before extraordinary any items and tax is adjusted for the effects of transactions of non-cash nature and any deferral s or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

8. REVENUE RECOGNITION

(i) The Reserve Bank of India's prudential norms on income recognition and provisioning for bad and doubtful debts has been followed.

(ii) Subject to the above, specific incomes have been accounted for as under

a. Interest income on loans is recognized under the internal rate of set urn method on accrual basis except in case of non-performing assets where it is recognized upon realization as per RBI norms.

b. Interest income on deposits with bank is recognized on a time proportion accrual basis taking into account the amount outstanding and the rate applicable.

c. Loan processing fee is recognized as income on accrual basis.

d. Profit on securitization of loan portfolio through bankruptcy remote Special Purpose Vehicle (SPV) is recognized over the residual life of the securitization transaction in terms of RBI Guidelines. Profit on sale of loan assets through direct assignment, without any recourse obligation or otherwise is amortized over the residual life of the loan.Net loss, if any, arising on account of securitization and direct assignment of loan assets is recognized immediately at time of sale.

e. Miscellaneous Income: Any other Income is accounted for as and when accrued

9. ASSET CLASIFICATIION AND PROVISIONING NORMS

The Company being a NBFC-MFI adopts the following norms based on the guidelines' instructions issued by the Reserve Bank of India:-

Asset Classification Norms:-

(i) Standard asset means the asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any problem nor carry more than normal risk attached to the business;

(ii) Non Performing asset means an asset for which, interest/principal payment has remained overdue for a period of 90 days or more.

Provisioning Norms

The aggregate loan provision is maintained by the Company at any point of time shall not be less than the higher of:-

a) 1% of the outstanding loan portfolio, or

b) 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of the aggregate loan installments which are overdue at 180 days or more.

10. BORROWING COSTS

Borrowing costs, which are directly attributable to the acquisition /cons (ruction of fixed assets, till the time such assets are ready foreign tended use, are capitalized as a part of the cost of assets.

Borrowing costs consist of interest and other borrowing costs that the Company incurred in connection with borrowing of the funds. Interest cost is expensed off on the accrual basis. Other Incidental Borrowing Costs namely Processing Fee, Due Diligence charges and Stamp duty charges are amortized over the period of the loan. All other borrowing costs other than mentioned above are expensed in the period they arc incurred. In case any loan is prepaid/ cancelled then the unamortized borrowing cost, if any, is finally expensed of on the date of prepayment/cancellation. In case of unamortized identified borrowing cost is out standing at the year end, it is classified under loans and advances as unamortized cost of borrowings.

11. FOREIGN CURRENCY

Transactions in foreign currency are recorded at the rates of exchange prevalent on the date of transaction. Exchange difference, if any, arising from foreign currency transaction are dealt in the Statement of Profit & Loss at year end rates. Monetary items (Payables, loans etc.) denominated in foreign currency are reported using the closing exchange rate on each Balance Sheet date.

12 SHARE/ DEBUNTURE ISSUE EXPENSES

All expenses pertaining to issue of share capital (both equity and preference share capital) and Debentures are adjusted /written off with Securities premium Reserve Account, if any, after the date of allotment as per the provisions of the Companies Act,20l3.

13. PROVISIONS AND CONTINGENT LIABILITIES

Provisions involving substantial degree of estimation in measurement Are recognized when there is present obligation as a result of past events and it is probable that there will be an out flow of resources. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value. Further the company being a NBFC-MFI also complies with the guidelines issued by the Reserve Bank of India regarding the various provisioning norms.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that the outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

14 EMPLOYEES RETIREMENT BENEFITS

Employee benefits includes provident fund, employee state insurance scheme, gratuity fund and compensated absences.

a) Short-term employee benefits including Salaries, short term compensated absences (such as a paid annual leave) where the absences are expected to occur within twelve months after the end of the period in which the employees render t he related service, profit sharing and bonuses payable within twelve months after the end of the period i n which the employees render the related services and non-monetary benefits for current employees are estimated and measured an an un-d is counted basis.

b) Defined Contribution Plan

Company's contribution paid/payable during the year to Provident Fund, Pension fund and employee state insurance scheme are recognized in the statement of Profit and Loss based on amount of contribution required to be made and when services are rendered by the employees.

c) Defined Benefit Plan

Liabilities for gratuity funded in terms of a scheme administered by the Life Insurance Corporation of India, are determined by actuarial valuation on Projected Unit Credit Method made at the end of each Balance Sheet date, provision for liabilities pending remittance to the fund is carried in the Balance Sheet.

d) Login term employee benefits

Liability for compensated absences is provided based on actuarial valuation carried out at the end of the financial period using projected unit Credit Method and is not funded. Past services cost is recognized immediately to the extent that the benefits are already used and otherwise is amortized on straight line base over the average period unit the benefits become vested. The retirement benefits obligation recognized in the balance sheet represents the present value of the defined benefits obligation as adjusted for unrecognized past service cost, as redeemed by the fair value of scheme assets.

Compensated absences which are not expected to occur within 12 months after the end of period in which the employee rendered the related services are recognized as a liability at the present value of the defined benefits obligation as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the statement of Profit and Loss as income or expense in the period in which they occur. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government bonds.

15. IMPAIRMENT OF ASSETS

The Company assesses at each balance sheet date whether there is an indication that an asset may be impaired. An asset is treated at impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to Statement of Profit and Loss in the year in which the asset is identified as impaired. The Impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

16. TAXATION

Tax expense for the period, comprising of current tax and decried tax are included in the determination of the net profit or loss for the period.

(i) Current tax expense is made based on the estimated tax liability as Per the appropriate provisions of the Income Tax Act, 1961 and considering the previous final assessment orders. The provision for current tax for the year will benefit off any provisions related to t hat year.

(ii) Excess/short provision of income tax relating to earlier years is disclosed separately in the accounts.

(iii) Deferred Tax Assets and Li abilities for timing differences between tax profit and book profit is accounted for using the tax rates and laws that have been enacted or substantially erected as on balance sheet date. Deferred Tax Assets are recognized to the extent there is reasonable certainty that the* assets can be realized in future. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets, if any.

(iv) Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set of assets and liabilities representing the current tax and where the deferred tax assets and deferred tax liabilities relate to taxes on income 1evied by the same governing taxation laws.

17. EARNING PER SHARE

In determining earning per share, the Company considers the net profit after tax and includes the post tax effect of any extra- ordinary exceptional item. The number of shares used in computing basic earning per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shores ore adjusted for the proceeds receivable, has the shares been actually issued at fair value. Dilutive potential equity shares are deemed converted at the beginning of the period, unless issued at a later date. The number of shares and potential dilutive equity shares are adjusted for any stock splits and bonus shares issued effected prior to the approval of the financial statements by the board of directors.

18 EMPLOYEE STOCK OPTION SCHEME(ESOS)

The Company has formulated Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999) as amended from time to time. These schemes provide for grant of options to employees of the Company that vest in a graded manner and that are to be exercised within a specified period. Farther, the new guidelines by Securities and Exchange Board of India (SEBI) came into force ie. SEBI (Share Based Employee Benefit) Regulations, 2014 (new regulation) according to which certain modification were required to be made in the test deed formulated under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999). Aj a result of new Regulations coming into effect, the earlier SEBI (Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999) Guidelines have been repealed. With the evolution of new SEBI Law, the existing Employee Welfare Trust need was realigned, so as to abide by the requirements of the new Regulations floated by the Market Regulator. Measurement and disclosure of ESOS is done in accordance with new regulation and guidance note on Accounting for employee share based payments issued by The Institute of Chartered Accountants of India. The Company measures compensation cost relating to employee stock schemes accordingly as per the guidance note. The compensation expense is recognized over the vesting period of the options on the Straight line basis.

19. LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the Less or are classified as operating leases. Payments made under operating leases are chained to the Statement of Profit and Loss on a straight line basis over the period of lease. The Company leases certain tangible assets and such leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the inception of the 1 ease at the lower of the fair value of the leased as and the present value of the minimum lease payments.

20. OPERATING CYCLE

Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current


Mar 31, 2014

Note No.1 General Information

Satin Credit care Network Limited ("The Company") is a public limited company and incorporated under the provision of the Companies Act, 1956. The Company is a non deposit accepting micro finance non banking financial company registered as NBFC-MFI with The Reserve Bank of India ("RBI"). Its equity shares are listed at Delhi Stock Exchange Limited, Jaipur Stock Exchange Limited and Ludhiana Stock Exchange Limited. The Company is engaged in the micro-finance activities.

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under historical cost convention in accordance with the generally accepted accounting principles and the applicable accounting standards notified under Section 211(3C) of the Companies Act,1956 and the amended Companies (Accounting Standards) Rules 2006, and the other relevant provisions of the Companies Act 1956(which continue to be applicable in respect of Section 133 of the Companies Act,2013 in terms of Circular 15/2013 dated 13th September,2013 and Circular no.4/2014 dated 04.04.2014 issued by the Ministry of Corporate Affairs) and the guidelines issued by the Reserve Bank of India. Accounting policies have been consistently applied except where a newly issued accounting standard or a guideline is initially adopted or a revision to the existing accounting standard requires a change in the accounting policy hitherto in use. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule VI to the Companies Act, 1956. The Company has ascertained its operating cycle as 12 months for the purpose of current, non-current classification of assets and liabilities.

2. USE OF ESTIMATES

The preparation of financial statements is in conformity with the Indian Generally Accepted Accounting Principles (GAAP) and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3. TANGIBLE ASSETS

All Tangible assets owned by the Company are stated at historic cost less accumulated depreciation. Tangible assets acquired on account of amalgamation are stated at the acquisition value agreed in the amalgamation agreement. Capital work in progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not ready for their intended use as at the Balance sheet date.

4. INTANGIBLE ASSETS

Computer software cost are capitalized and amortized using the written down value method. Goodwill acquired on account of amalgamation is written off in equal installments over a period of five years.

5. DEPRECIATION

Depreciation is provided at the rates prescribed in Schedule XIV of the Companies Act, 1956 on written down value method. Depreciation for assets acquired on amalgamation has been charged from the effective date of merger. Fixed assets costing up to Rs. 5,000/- are fully depreciated in the year of purchase itself.

6. INVESTMENTS

(i) Investments that are readily realizable and are intended to be held for not more than one year from the date, on which these investments are made, are classified as current investments. All other investments are classified as Long term investments.

(ii) The Company values its Investments based on the accounting standard issued by the Institute of Chartered Accountants of India as under:

a. Investment held as long-term investments is valued at cost. Provision for diminution in value is not made unless there is a permanent fall in their net realizable value.

b. Current investments are valued at lower of cost or net realizable value.

7. CURRENT ASSETS

A. Trade Receivables:

Loan portfolio comprises of Trade receivables under finance contracts with the borrowers as on the Balance Sheet date.

B. Cash and Cash Equivalents:

Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash on hand, demand deposits with banks and other short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

8. REVENUE RECOGNITION

(i) The Reserve Bank of India's prudential norms on income recognition and provisioning for bad and doubtful debts has been followed.

(ii) Subject to the above, specific incomes have been accounted for as under:

a. Interest income on loans is recognized under the internal rate of return method on accrual basis except in case of non-performing assets where it is recognized upon realization as per RBI norms.

b. Interest income on deposits with bank is recognized on a time proportion accrual basis taking into account the amount outstanding and the rate applicable.

c. Loan processing fee is recognized as income on accrual basis.

d. Profit on securitization of loan portfolio through bankruptcy remote Special Purpose Vehicle (SPV) is recognized over the residual life of the securitization transaction in terms of RBI Guidelines. Profit on sale of loan assets through direct assignment, without any recourse obligation or otherwise is amortized over the residual life of the loan. Net loss arising on account of securitization and direct assignment of loan assets is recognized at time of sale.

e. Miscellaneous Income: DM dend Income, Miscellaneous Income is accounted for as and when accrued.

9. ASSET CLASSIFICATION AND PROVISIONING NORMS

The Company being a NBFC-MFI adopts the following norms based on the guidelines/instructions issued by the Reserve Bank of India:-

Asset Classification Norms:

(i) Standard asset means the asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any problem nor carry more than normal risk attached to the business;

(ii) Non Performing asset means an asset for which, interest/principal payment has remained overdue for a period of 90 days or more.

Provisioning Norms:

The aggregate loan provision is maintained by the Company at any point of time shall not be less than the higher of:-

a) 1% of the outstanding loan portfolio, or

b) 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of the aggregate loan installments which are overdue for 180 days or more.

10. BORROWING COSTS

Borrowing costs, which are directly attributable to the acquisition /construction of fixed assets, till the time such assets are ready for intended use, are capitalized as a part of the cost of assets.

Borrowing costs consist of interest and other borrowing costs that the Company incurred in connection with borrowing of the funds. Interest cost is expensed off on the accrual basis. Other Incidental Borrowing Costs namely Processing Fee, Due Diligence charges and Stamp duty charges are amortized over the period of the loan. All other borrowing costs other than mentioned above are expensed in the period they are incurred. In case any loan is prepaid/ cancelled then the unamortized borrowing cost, if any, is fully expensed off on the date of prepayment/cancellation. In case of unamortized identified borrowing cost is outstanding at the year end, it is classified under loans and advances as unamortized cost of borrowings.

11. FOREIGN CURRENCY

Transactions in foreign currency are recorded at the rates of exchange prevalent on the date of transaction. Exchange difference, if any, arising from foreign currency transaction are dealt in the Statement of Profit & Loss at year end rates.

12. SHARE/DEBENTURE ISSUE EXPENSES

All expenses pertaining to issue of share capital (both equity and preference share capital) and Debentures are adjusted / written off with Securities premium Reserve Account, if any, after the date of allotment as per the provisions of the Companies Act, 1956.

13. PROVISIONS AND CONTINGENT LIABILITIES

Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value. Further the company being a NBFC-MFI also complies with the guidelines issued by the Reserve Bank of India regarding the various provisioning norms.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that the outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

14. EMPLOYEE RETIREMENT BENEFITS

Contributions to Provident Fund and Employee State Insurance are being paid and accounted as per the respective rules and debited to Statement of Profit and Loss. The Company has no further obligations beyond its monthly contributions.

Employees Gratuity liability has been calculated and managed through a trust by the Life Insurance Corporation of India. As per the valuation conducted by the insurance company the shortfall is paid as the premium for the year and which is debited as an expense in the Statement of Profit and Loss.

Provision for encashment of leave is being made on the basis of actuarial valuation made at the end of each financial year and is charged to Statement of Profit and Loss.

15. IMPAIRMENT OF ASSETS

The Company assesses at each balance sheet date whether there is an indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to Statement of Profit and Loss in the year in which the asset is identified as impaired. The Impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

16. TAXATION

Tax expense for the period, comprising of current tax and deferred tax are included in the determination of the net profit or loss for the period.

(i) Current tax expense is made based on the estimated tax liability as per the appropriate provisions of the Income Tax Act, 1961 and considering the previous final assessment orders. The provision for current tax for the year will be net off any provisions related to that year.

(ii) Excess/short provision of income tax relating to earlier years is disclosed separately in the accounts.

(iii) Deferred Tax Assets and Liabilities for timing differences between tax profit and book profit is accounted for using the tax rates and laws that have been enacted or substantially enacted as on balance sheet date. Deferred Tax Assets are recognized to the extent there is reasonable certainty that these assets can be realized in future. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets, if any.

(iv) Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets and liabilities representing the current tax and where the deferred tax assets and deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

17. EARNING PER SHARE

In determining earning per share, the Company considers the net profit after tax and includes the post tax effect of any extra- ordinary / exceptional item. The number of shares used in computing basic earning per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value. Dilutive potential equity shares are deemed converted at the beginning of the period, unless issued at a later date. The number of shares and potential dilutive equity shares are adjusted for any stock splits and bonus shares issued effected prior to the approval of the financial statements by the board of directors.

18. EMPLOYEE STOCK OPTION SCHEME (ESOS)

The Company has formulated Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999) as amended from time to time. These schemes provide for grant of options to employees of the Company that vest in a graded manner and that are to be exercised within a specified period. Measurement and disclosure of ESOS is done in accordance with guidance note on Accounting for employee share based payments issued by The Institute of Chartered Accountants of India. The Company measures compensation cost relating to employee stock schemes accordingly as per the guidance note. The compensation expense is recognized over the vesting period of the options on the straight line basis.

19. LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the Lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of lease. The Company leases certain tangible assets and such leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments.

20. OPERATING CYCLE

Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non current

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