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Directors Report of Satin Creditcare Network Ltd.

Mar 31, 2015

Dear Members,

The Directors lake pleasure in presenting the Twenty Fifth Annual Report of the Company together with the Audited Accounts for the financial year ended 31st March, 2015.

FINANCIAL SUMMANY/ HIGHLIGHTS, OPERATIONS, STATE OFAFFAIRS

(Rs. In Crores)

Particulars Current Year Previous year

Gross Income 324.16 191.65

Expenses 275.54 167.53

Profit before Depreciation and tax 48.62 24.13

Depreciation and amortisation expenses 1.96 0.71

Profit Before Exceptional, Corporate Social Responsibility Expense, Extraordinary Items 46.66 23.41 And Tax

Exceptional Items - -

Profit Before Extraordinary Items, Corporate Social Responsibility Expense And Tax 46.66 23.41

Corporate Social Responsibility Expense 0.21 -

Extraordinary Items - -

Profit Before Tax 46.45 23.41

Tax Expense 14.73 7.85

Profit after Tax 31.72 15.56

Brought forward from Previous Year 22.51 10.14

Profit available for appropriation 54.23 25.70

Transfer to Statutory Reserve Fund 6.34 3.11

Proposed Dividend-Preference Share Capital @12.34% 0.74 0.06

Dividend Distribution Tax 0.15 0.01

Surplus carried to Balance Sheet 47.00 22.51

OPERATIONS, PROSPECTS AND FUTURE PLANS

During the year under review, your Company put in a concerted effort towards increasing efficiency to increase the market reach. The Company has achieved a disbursement of Rs. 2,365.76 Crores against Rs. 1,229.20 Crores during the previous year. The net profit during the year with Rs. 31.72 Crores as against Rs. 15.56 Crores during the previous year showing a growth of 103.86%. Net worth of your Company as on March 31,2015 was Rs. 199.48 Crores with capital adequacy of 15.67 %. Return on Average Assets and Return on Average Net worth for the year were 1.50% and 18.45 % respectively. During the financial year 2014- 15, your Company bad undertaken several initiatives with an objective to enhance customer reach, improve operating efficiencies, reduce operating cost and build up a leadership pool at various levels. We continued to provide high-quality customer service with robust operating systems. Besides, we strengthened our risk mitigation practices to emerge: as a credible player with a long-term commitment to financial inclusion. The Company has built network with suitable partners corresponding to the potential of business in which the company is operating. Employees are recruited from various sources and are provided training to improve skills considering the job requirements at financial levels. This has enabled die Company to reduce cost and improve bottom luck. The company has also stalled operation in the state of Maharashtra. Presently, it has a strong existing distribution network of 267 branches in 11 states of Bihar, Uttar Pradesh, Madhya Pradesh, Jammu & Kashmir, Uttrakhand, Maharashtra, Rajasthan, Punjab, Hanyana and Delhi and a Union Territory of Chandigarh. The Company started its JLG operations from Uttar Pradesh and then extended it to Madhya Pradesh, entered Bihar in financial year 2012 and other states gradually over the year.

Your Company has submitted an application for converting into a Small Finance Bank (SFB) on 28th January, 2015 as per the 'Guidelines for Licensing of Small Finance Banks in the Private Sector1 issued by the Reserve Bank of India (RBI) on 27th November, 2014. ... .

Operational Highlights:

Particulars As on March, 2015

Number of branches 267

Amount disbursed (Rs. in Crores) 2,365.76

Number of active loan 11,90,999

Total Assets under management including securities' 2,140.65 and assigned portfolio (Rs. in Crores)

The Company already has borrowing arrangement with a large number of lenders and have started association with few more institutions to diversify its sources of borrowing.

During the year the authorized share capital of the Company was satisfied video approval of equity shareholders through Extraordinary General Meeting held on 13th March, 2015 from Rs. 130,00,(0,000/- (Rupees One Hundred and Thirty Crore) divided into 3.00,00.000 (Three Crore) Equity Shares of Rs. 10/- (Rupees Ten only)each and 10.00,00.000 (Ten Crore) Preference Shares of Rs. 10'- (Rupees Ten only) each to Rs. 130,00,00,000/- (Rupees One Hundred and Thirty Crore) divided into 4,00,00,000 (Four Crore) Equity Shares of Rs. 10/- (Rupees Ten only) each ("Equity Shares'" and 9,00,00,000 (Nine Crore) Preference Shares of Rs. 10/- (Rupees Ten only) cash ("Preference Shares"). Further, the Company has obtained the approval of equity shareholders through Extraordinary General Meeting held on 13th March, 2015 for allotment of up to 32,30,000 (Thirty Two Lacs Thirty Thousand) Equity Shares of face valve of Rs. 10/- (Rupees Ten only) cash fully paid-up for cash at an issue price of Rs. 130/- (Rupees One Hundred and Thirty only) inducing premium of Rs. 120/- (Rupees One Hundred and Twenty only) to the Promoters and Non-Promoters.

Further, the Company has obtained the approval of shareholders through Extraordinary General Meeting held on 13th March, 2015 for allotment of up to 28.70.000 (Twenty Eight Lacs Seventy Thousand) fully convertible Warrants ("Equity Warrants") to the persons belonging to the Promoter as well as Non-Promoter Category, cash convertible into, or exchangeable for, one Equity Share of face value of Rs. 10/- (Rupees Ten only) each at a price (including the Equity Warrant subscription price and the Equity Waning exercise price) of Rs. 130/- each (Rupees One Hundred and Thirty only) cash, and to issue fresh Equity Shares on the conversion of the Equity Warrants subject to terms and conditions determined by the Board. The objective of Preferential allotment of equity shares and equity warrants is to fund the growth and operations of the Company, including growing the loan book, operating expenses, marketing expenditure, working capital and for augmenting the infrastructure of the Company, provided however, that a portion of the' proceeds of investment received from the concerned promoters shall be used to redeem 12% Cumulative. Rated, Non- participative. Non-convertible, Compulsorily redeemable 60,00,000 (Sixty Lacs) existing Preference shares. The due date of redemption is 27th November 2015. Pending utilization of such proceeds for the redemption of aforesaid Preference shares, the Company shall, subject to applicable law, invest the funds in high quality interest bearing liquid instruments and deposits with the banks for the applicable period until the due date of redemption of Preference shares. However the in-principle approval from Stock Exchange is pending.

Company's Prospects, Future Plans and Business Overview:

Your Company is continuously emphasizing for economy of scale benefit as well as improvement in quality of services which would give competitive advantage. The overall regulatory environment is improving. The Company is hopeful in achieving better performance during the current year. The fluctuation in the foreign currency and tough competition in the international financial market will continue to be a challenge but your Company foresees better turnover and increased demand of its quality services. There are some initial indication of interest rate cut by few bankers, which may help the Company to reduce it's cost of borrowing. Please refer the Management Discussion and Analysis Report for more information on your Company's Business Overview.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Being your Company is under the category of Non-Banking Finance entity registered with Reserve Bank of India, the provision of Section 186 of the Companies Act, 2013 and relevant Rules made there under doesn't apply.

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has proper and adequate system of internal control geared towards achieving efficiency in its operations, safeguarding assets, optimum utilization of resources and compliance with statutory regulations. Your Company has instituted various preventive or control measures in the loan process to mitigate the risk of extending loans to non-existent borrowers or fictitious borrowers.

The Company has continued its efforts to align its processes and controls with best practices and has put in place a process wise internal control framework across the Company. The Internal Auditors of the Company conduct audits of various departments based on an annual audit plan covering key are a of operations. Internal Audit reviews and evaluates the adequacy and effectiveness of internal controls, ensuring adherence to operating guidelines and systems are recommending improvements for strengthening them. There was no material event recorded subsequent to the date of financial statements.

SUBSIDIANY AND ASSOCIATES COMPANIES

The Company doesn't have any Subsidiary, Associate Company and Joint Venture during the financial year 2014-15.

Further, since the Company has no subsidiary, the requirement of formulation of policy for determining 'material' subsidiaries" under clause 49 IV) of the Equity Listing Agreement is not applicable.

DIRECTORS AND KEY MANAGEMENT PERSONNEL (KMP)

Mr. Richard Benjamin Butler (DIN: 06574786) retire by rotation and being eligible offers himself for re-appointment. Mr. Richard Benjamin Butler it representing M V Mauritius Limited on the Board of the Company and has shown interest for his re-appointment. The Nomination & Remuneration Committee and the Board of Directors have recommended his re-appointment for consideration of the shareholders.

Mr. Goh Colin (DIN: 06963178) and Mr. Sanjay Kumar Bhatia (DIN: 07033027) have been appointed as Additional Directors on 12th November, 2014 and 06th December, 2014 respectively. The tenure of their office as Director comes to an end at forthcoming Annual General Meeting of the Company. Pursuant to Section 149,150,152,161 and other applicable provisions of the Companies Act, 2013 and the Rules made there under, read with Schedule IV of the Companies Act, 2013 and as per Articles of Association of the Company, Mr. Goh Colin (DIN: 06963178) and Mr. Sanjay Kumar Bhatia (DIN: 07033027), appointed as a non-executive Director of the Company, who have submitted a declaration that they meet the criteria for independence as provided in Section 149(6) of the Companies Act, 2013. The Nomination & Remuneration Committee anc the Board of Directors have also recommended their appointment for consideration of the shareholders. They will be appointed a< Independent Director of the Company to hold office for a period of live years from the date of their respective appointment as additional director or till such earlier date as may be determined by any applicable statutes, rules, regulations or guidelines and not liable to retire by rotation.

Mr. Ole Peder Sandsbraaten (DIN:06829806) (represents NMI Fund III KS). has tendered his resignation from Company's Board and in his place, Mr. Arthur Stemberg (DIN: 07123647) has been introduced as an Additional Director on 25th May, 2015. The Directors wish to place on record their appreciation for the contribution made by Mr. Ole Peder Sandsbraaten. The Nomination & Remuneration Committee and the Board of Directors have also recommended appointment of Mr. Arthur Stemberg for consideration of the shareholders.

Brief resume of these Directors, their educational and professional qualifications, nature of their working experience, their achievements, name(s) of the companies in which they hold directorships, memberships and chairmanships in various Committees, their shareholding in the Company, relationship between directors inter-section are provided in Corporate Governance Report forming part of the Annual Report.

In order to comply with the new provisions of Companies Act, 2013, the Board Members designated following persons as "Key Managerial Personnel" of the Company with effect from 26thMay. 2014 (vide resolution passed in its meeting held on 26th May. 7014)

SI. No. Name of KMP Designation

1. Shri H P Singh Chairman cum Managing Director

2. Shri Jugd Kataria Chief Finance Officer

3. Choudhany Runveer Krishanan Company Secretary & Compliance Officer

During the year 4 (Four) Board Meetings were held. These Board Meetings were held on 26th May, 2014,08th August, 2014,12th November, 2014 and 09th February, 2015.

MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OFITS COMMITTEE AND INDIVIDUAL DIRECTOR

The Board of directors of the Company has evaluated its own performance and the performance of its Committee(s) and individual directors on various set parameters. The manner of evaluation was conducted after consideration of parameters through set of questionnaire(s). The policy on Nomination & Remuneration for Directors, Key Managerial Personnel (KMP) and senior management and other employees contains the methodologies of evaluation criteria. The Board found its own performance and performance of each director individually and of its various Committee(s) satisfactory.

STATEMENT ON DECLARATION CERTIFICATE OF INDEPENDENCE" U/S 149(6) FROM INDEPENDENT DIRECTORS

Pursuant to Schedule IV and Section 149(6) of the Companies Act, 2013, the Board has independent directors and there is appropriate balance of skills, experience and knowledge in the Board so as to enable the Board to discharge its functions and duties effectively. The independent directors have submitted a declaration that the independent directors meet with the criteria of independence as required under Section 149(6) of the Companies Act, 2013.

DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to section 134(5) of the Companies Act, 2013, the Directors hereby confirm:

1. That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. That the directors had 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 at the end of the financial year and of the profit and loss of the Company for that period;

3. That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. That the directors had prepared the annual accounts on a going concern basis;

5. That the directors, had laid down internal financial controls to be followed by the Company and that such internal financial control; arc adequate and were operating effectively; and

6. That the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Information on material orders passed by the regulators or courts or tribunals:

Pursuant to rule 8(5Xvii) of the Companies (Accounts) Rules, 2014 there are no material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in finite.

RELATED PARTY TRANSACTIONS

During the financial year 7014-1S, then is no materially significant related party transaction with the Pnmpany1' promoters, directors, the management, their subsidiaries or relatives which may have potential conflict with the interest of the Company at large. The necessary disclosures regarding the related party transactions are given in the notes to accounts. The Company has formulated a policy on dealing with the Related Party Transactions and necessary approval of the Audit Committee and Board of Directors were taken wherever required in accordance with the Policy. The Company has also formulated a policy for determining the material related party transactions and the details of such policies for dealing with related party transactions are disseminated on the website (under reports and disclosures Section ' ) of the Company www.satincreditcare.corn

Particulars of Contracts or Arrangements with related parties referred to in Section 188(1) is given in Form AOC- 2 as Annexure -1. Justification for entering into related party transactions:

In order to broaden the horizon of working areas and to diversify the risk of business, the Company has discussed and approved the proposal to enter into a service agreement with Taraashna Services Private Limited (a private limited company engaged in the business of providing business correspondent services) vide resolution passed in its Board meeting held on 13th November, 2013. Except to the extent of directorship/ shareholding (directly or through related party), of Mr. H P Singh. Chairman cum Managing Director and Mr. Satvinder Singh, Director of the company, no other Director or KMP are in anyway concerned or interested in aforesaid related party transaction. Further, the remuneration is paid to Mr. H P Singh. Chairman cum Managing Director and sitting fee to non-executive directors at the rate of Rs. 10,000/- for each Board meeting attended and are shown under Related party disclosures segment under "notes to the account" of Balance Sheet in terms of Accounting Standard 18 issued by The Institute of Chartered Accountants of India.

AUDITORS & THEIR REPORTS

Statutory Auditors & their Report:

M/s A.K. Gangaher & Co., Chartered Accountants, the existing auditors of the Company retire at the conclusion of this Annual General Meeting and being eligible, offer themselves for re-appointment. The retiring auditors have furnished a certificate of their eligibility for re-appointment under Section 139(1) of the Companies Act, 2013 and Companies (Audit and Auditors) Rules. 2014.

The same was discussed in the Audit Committee meeting. Your director! recommend their re-appointment. The Company has received audit report from M/s A. K. Gangaher & Co., Chartered Accountants.

Secretarial Auditors & their Report:

In terms of Section 204 of the Companies Act, 2013 and Rules framed there under and on the recommendation of the Audit Committee, the Board of Directors of the Company have appointed M's S. Behera & Co. Company Secretaries (ICSI PCS Registration No. 980) as the Secretarial Auditor of the Company for the financial year 201S-20I6. The Company has received consent from M/s S. Behera & Co. Company Secretaries, for their appointment.

The Board of Directors has appointed M/s S. Behera & Co. Company Secretaries (ICSI PCS Registration No. 5980) as the Secretarial Auditor of the Company in relation to the financial year 2014-15. The Secretarial Audit for financial year 2014-15 was conducted and the report is available on the Company's website www.satincredltcare.con. Any member interested in hard copy of the Secretarial Audit Report may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy. Secretarial audit report as provided by M/s S. Behera & Co. Company Secretaries (ICSI PCS Registration No. 5980) is also annexed to this Report as Annexure-II.

Qualifications in Audit Reports:

Your Directors do not observe any qualification, reservation or adverse remark or disclaimer made by the statutory auditor in his report and by the company Secretary in practice in his secretarial audit report.

AUDIT COMMITTEE

The Company has an Audit Committee in accordance with the provisions of Section 177 of the Companies Act, 2013 and in accordance with Equity Listing agreement and as per other applicable laws. All members of the Committee are financially literate within the meaning of the Clause 49 of the listing agreement. The Chairman of the Committee was present at the last Annual General Meeting to answer the queries of the Shareholders. The scope of the activities of the Audit Committee is as set out in clause 49 of the Equity Listing Agreements with the Stock exchanges read with Section 177 of the Companies Act, 2013 and other applicable laws. In terms of Section 1 '7(4) providing the terms of reference for the Audit Committee, the Board has approved a comprehensive guidance note including terms of reference for the Audit Committee working. The composition of the Audit committee and the details of meetings attended by the Directors are provided in Corporate Governance Report Section of this Annual Report.

DIVIDEND

The Company has accounted for in its financial statements the necessary dividend for fully paid up 12% Cumulative, Rated, Non Participative, Non-Convertible, and Compulsorily Redeemable Preference Shares. Directors of your Company have recommended a final dividend of Rs. 74,04,000/-(Rupees Seventy Four Lacs Four Thousand Only) for Fully Paid 6,00,000 Preference Shares for the financial year 2014-15, which is subject to your approval The total dividend pay-out for the financial year will amount to Rs 74,04,000/- (Rupees Seventy Four Lacs Four Thousand Only)(excluding dividend distribution tax). Further, in order to undertake and carry on future plans, it is necessary to conserve the resources. Further, your directors are of the opinion of retaining the profits for the year within the Company, and thus have not recommended any dividend on equity shares for the year ended 31st March, 2015.

CORPORATE SOOAL RESPONSIBILITY

As per Section 135 of the Companies Act, 2013, all companies having net worth of Rs. 500 Crore or more, or turnover of Rs. 1,000 Crore or more or a net profit of Rs. 5 Crore or more during any financial year will be required to constitute a Corporate Social Responsibility (CSR) committee of the Board of Directors comprising trace or more directors, at least one of whom will be an independent director. To meet the requirement of provisions of Sections 135 of the Companies Act 2013. and read with The Companies (Corporate Social Responsibility Policy) Rules, 2014 and Schedule VII of the Companies Act 2013, the Board of Directors has constituted the Corporate Social Responsibility Committees vide resolution passed in its meeting held on 26th May, 2014. The CSR Committee vide its meeting dated 09th February, 2015 approved and recommended to the Board for its approval a policy known as CSR policy, which indicates the activities to be undertaken by the Company as specified under Schedule VII of Companies Act, 2013. Further, the Company in its Board meeting dated 09thFcbruany, 2015 approved the detailed CSR policy.

Now as per the requirement of Rule 8(1) of The Companies (Corporate Social Responsibilities) Rules, 2014 the Annual Report on CSR is annexed as Annexure III to this report and the same is posted on the website of the Company i.e. www.satincreditcare.eom

E-VOTING

The Company is providing e-voting facility to all members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014 and Clause 35B of the Listing Agreement. The above Rule 20 of the Companies (Management and Administration) Roles, 2014 have been amended on 19thMarch, 2015 to introduce a new concept of e-voting i.e. E-Voting at general meeting through all electronic voting system. To comply with the requirements of new Companies Act, 2013 and to ensure good governance for its members, your Company has provided c-voting facility for its last three general meetings to enable its members to participate in the voting electronically. The intimation(s) for e-voting for ensuing Annual General Meeting is also provided with notice to shareholders of this Annual Report.

EMPLOYEES STOCK OPTION PLAN:

As against 4,25,000 Equity Shares issued to Satin Employees Welfare This under Satin ESOP 2009, the Company granted 1,50,000 Options to two employees of the Company as per the terms of Satin ESOP 2009 on 12 th January, 2010. These Options are invested and exercised as per terms set out under ESOP 2009. As of now, 1,50,000 shares are transferred to employees and are now free from lock- in.

Further, the Company granted 98,300 Options out of remaining 2,75,000 Equity Shares to various employees as per the terms of Satin ESOP 2009 on 02nd December, 2013 out of which 29,090 Options were vested and 25,824 were exercised on 2nd December, 2014. The exercised shares are in lock in period of one year from the date of transfer of shares from Satin Employees Welfare Trust to employees.

INFORMATION REQUIRED TO BE DISCLOSED UNDER SEBI (ESOS & ESPS) GUIDELINES, 1999

Initially, the Company had issued 4,25,000 Equity Shares of Rs. 10/- cash at a Premium of Rs.10/- per share to Satin Employees Welfare Trust under Satin ESOP 2009 on 27th November, 2009 for holding shares on behalf of the Employees and to transfer the said shares to the eligible employees upon exercise of options.

The Company has further, allotted below-mentioned equity shares:

a) 1,00,00) equity shares of Rs. 10/- each at a premium of Rs. 12/- each to Satin Employees Welfare Trust under Satin ESOP 2010 scheme on 22nd June, 2010.

b) 1,50,00) equity shares of Rs. 10/- cash at a premium of Rs. 15/- cash to Satin Employees Welfare Trust under Satin ESOP II 2010 scheme on 21st April, 2011.

Out of 98,300 options granted on 2nd December, 2013,29,090 Options were vested and 25,824 were exercised on 2nd December, 2014.

POLICIES

Vigil Mechanism Whistle Blower Policy:

The Company has established a vigil mechanism policy vide incorporating and adopting a Whistle Blower Policy for directors & employees pursuant to the requirement under section 177(9) of Companies Act, 2013 read with Rule 7 of Companies (Meeting of Board & its Paws) Rules, 2014 and Clause 49 of Equity Listing Agreement in its Board Meeting dated 09"Fcbruany, 2015. The policy empowers the blower to report concern about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or this policy. The detailed vigil mechanism is communicated to all the directors and employees and is also disclosed on the website of the company www.satincreditcare.com

Policy on Nomination & Remuneration for Directors, Key Managerial Personnel (KMP) & Senior Management and Other Employees:

In pursuance of the Company's policy to consider human resources as its invaluable assets, to pay equitable remuneration to all Directors, Key Managerial Personnel (KMP), Senior Management and other employees of the' Company, to have diversified Board, to harmonize the is privations of human resources consistent with the goals of the Company and in terms of Section 178 of the Companies Act, 2(13 and the listing agreement as amended from time to time and Rules/ Regulations/ Guidelines/ Notifications issued by Securities and Exchange Board of India (SEB1) from time to time, the policy on nomination and remuneration of Directors, Key Managerial Personnel and Senior Management which includes within It a policy for having a Diversified Board and Familiarization programme for Independent Director has been formulated and approved by the Board of Directors vide its meeting dated 09" February, 2015. This policy shall act as a guideline for determining, inter-alia, qualifications, positive attributes and independence of a Director, diversification of the Board, matters relating to the remuneration, appointment, removal and evaluation of performance of the Directors, Key Managerial Personnel, Senior Management and other employees of the Company. The Company shall familiarize the independent directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company etc., through various programmes. The details of such familiarisation programmes is posted on the Company's website vide weblink http://ww-w.satinereditcare.com/pdf/Nominatinn- and-Remuneratfon-Policy.pdf.

Corporate Social Responsibility Policy:

Corporate Social Responsibility (hereinafter referred to as 'CSR') is a buzz word now a days for corporate. Even your Company has recognized its importance quite early therefore it has vide resolution passed in its Board Meeting dated 26th May, 2014 has constituted the Corporate Social Responsibility Committee. Further, Corporate Social Responsibility Committee in its meeting dated 09" February, 2015 has framed Corporate Social Responsibility Policy (hereinafter referred to as Policy') pursuant to the requirement of Section 135( 1) & (3) of the Companies Act, 2013 along with The Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time. In the aforesaid backdrop, policy on Corporate Social Responsibility of the Company is broadly framed taking into account the welfare measures for the community at large so as to ensure the poorer section of the society deriving the maximum benefits. It also aims to contribution to the society at large by way of social and cultural development, imparting education, training and social awareness especially with regard to the economically backward class for their development and generation of income to avoid any liability of employment

Risk Management Policy:

The Company has framed a policy under clause 49(VI) of the Listing Agreement to evaluate and monitor company risks and develop comprehensive strategy to mitigate various type of risks and take corrective actions in order to prevent adverse events. The risks involved are Financial Risks. Operational Risks and External Risks.

Related Party Transaction Policy:

Related Party Transaction Policy is adopted by the Board of Directors of the Company vide its meeting dated 09th February. 2015 pursuant to the compliances under the provisions of the Section 188 of the Companies Act, 2013 read with Rule 15 of The Companies (Meetings of Board and its Powers), Rules, 2014 and Clause 49(VII) of the Equity Listing Agreement. The objective behind framing the policy is to ensure that certain Related Party Transactions are managed and disclosed in accordance with the strict legal and accounting requirements to which the Company is subject.

All Related Party Transactions shall require approval of Audit Committee and said Committee will review and may amend this policy from time to time. The policy on Related Party Transaction is posted on website of the Company and weblink of the Company is www.satincreditcare.com/pdf/Related-Party-'Transaction-Policy.pdf.

Sexual harassment policy for women under The Sexual Harassment of Women at workplace (Prevention Prohibition and Redressed) Act. 2013:

Your Company is committed to ensure fair environment for its executives, staff and workers. In compliance of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressed) Act. 2013, the Company has adopted Sexual Harassment Policy approved vide Board of Director's meeting held on 10th January, 2015 which ensures a free and fair enquiry process with clear timelines. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressed) Act, 2013.

MANAGEMENT DISCUSSION AND ANALYSIS Resources and liquidity

During the year, the Company has been availing various credit facilities from various Banks, lenders and from institutions for its microfinance operation which is the main activity of the Company. The Company has raised debt funds through term loan, cash credit limit, Inter Corporate Deposit, listed/unlisted Non-Convertible Debenture and also raised funds through securitization/ assignment transactions. In over 24 years of operation, Satin has developed partnerships with over 50 public sector banks, private sector banks, foreign banks and other domestic and overseas financial institutions. There have been no delays/defaults in servicing of principal and interest with respect to the said borrowings. The Company has enhanced its trust and credibility with Banks and financial institutions over time thus getting increased exposure from them. During the month officially, 2014, the Company raised subordinated debt (long- term tier-II) of Rs 21 Crores by issuing NCDs the Company has also raised money amounting to approx. Rs. 41.20 Crores and subordinated debt of approx. Rs 21.19 Crores on 23rd December. 2014 is External Commercial Borrowing. The Company has obtained the shareholders' approval at the Extraordinary General Meeting to issue equity shares and warrants convertible into equity. The Company is in the process of taking the necessary approval to close the transaction.

Credit Analysis and Research Limited (CARE) has reaffirmed the Long Term Facilities Rating of SCNL of CARE BBB (Triple B Plus) aggregating Rs. 1.300 Crores.

In view of the overall positive environment in the Microfinance Industry in India and better regulatory clarity, the overall liquidity and funding to MFIs his further improved. The Company has been regular in repayment to all its lenders and has excellent relationship with all the financial institutions and banks.

Industry Scenario

In 2010-11, India's microfinance market was facing difficult time but today, it can be said that the microfinance sector in the India has emerged from this crisis stronger than before. The Industry has matured with stronger institutions, the credit bureaus are functional, the investors and lenders are back in business, there is greater focus of the government on financial inclusion with launch of Micro Units Development and Refinance Agency (Mudra) Bank, greater regulatory clarity, RBI considering giving new license for Small and Payment banks etc. In view of the above, there are better days ahead for Indian Microfinance industry.

Business Review

The Company has done well during the financial year 2014-15 as compared to last year and it's peers in the industry. The Company has leadership position in the underpenetrated North India. The portfolio quality and operating cost of the Company is amongst the best in the industry. The Company has an experienced and stable management team and Board of Directors. The Company is hopeful of performing well during the content year.

Opportunities

Financial sector development provides small enterprises and households with market access leading to their inclusion in the regional and ultimately the global economy. RBI has recently increased the limit of eligible borrowers to whom NBFC-MFI can lend and further liberalized some norms which is good for the growth of the industry and for the borrowers. This has improved the support and confidence of all stakeholders for the microfinance sector. The Company is operating in Northern and Central India and the reach of other MFIs is comparatively less and hence there is a huge opportunity to be tapped and large population to be served. The Company is making all efforts to use its experience of working in the same geography for last many years.

Challenges

While the regulatory environment has improved the stakeholder's confidence still continue to be exposed to inherent risks in business model. Given that die microfinance borrowers belong to low income segment, customers are more prone to default. Moreover, with MFI operations concentrated in specific geographies, geographic concentration risks persist, these risks include natural disasters, social unrests, or political upheavals. The Reserve Bank of India has issued a series of circulars, directions and notifications to give the required regulator/ clarity. Also the MFI industry has also collectively worked to bring back the stakeholders' confidence by working responsibly. The Company has a strong and experienced Board having multiple personalities having experience in different areas. The Company's senior management team has expertise in their respective field and the Company has geographical advantage, lime tested systems and processes, effective internal audit and risk department, association with a large number of lenders and clean repayment track record, good credit rating in the sector which helped the Company to achieve the performance better than its competitors.

Outlook

The overall outlook for the Microfinance Industry has improved during the financial year 2014-15. The Reserve Bank of India has issued a number of circulars and provided the required regulatory clarity. A major outcome of the guidelines was the involvement of credit bureaus to record and monitor the creditworthiness of borrowers. There is greater emphasis today on credit score prior to disbursement of leans, and subsequent data sharing with credit bureaus. The credit bureau checks enable MFIs to assess the extent of leverage of prospective customers and their repayment track record. Additionally, the Microfinance Institutions Network (MFIN) has prescribed a code of conduct that provides guidelines for MFI operations and greater uniformity in their functioning.

Risk & Concerns

The Company is exposed to financial, operational and political risks. Because an Mrfs. loan portfolio is its most valuable asset, the financial risks i.e. credit, market and liquidity are of greatest concern.

Financial risks begin with the possibility that a borrower may not pay the loan on time with interest (credit risk). They include the possibility that the MFI might lose a significant part of the value of loan portfolio as a result of an economic downturn, hyperinflation, and other externally generated causes (market risk). Fanatical risk can also include changes in interest rates of government lending programs or the possible enforcement of laws. Marked risks include lower prices for borrowers' products and services, which could directly affect their ability or willingness to repay an outstanding loan. MFIs should be particularly aware of liquidity risk the lack or shortage of funds for current and future expenses or loans. Liquidity risk can result from an overly aggressive lending strategy, law levels of on-time payment and seasonal variations of demand or unanticipated expenses.

To prepare for these risks, Company usually hold in reserve certain percent of assets in cash and in short-term assets. The Company maintain reserves and provisions in its financials for meeting expected or unexpected future contingencies. The Company follows a conservative financial approach by following prudent business and risk management practices.

Adequacy of internal controls

The Company has proper and adequate internal controls systems to ensure that all activities are monitored and controlled against any unauthorised use or disposition of assets, misappropriation of funds aid to ensure that all the transactions are authorised, recorded, reported and monitored correctly. For the purpose of correctness and accuracy the process of job rotation is followed in different departments. The Company has adequate working infrastructure having computerization in all its operations including accounts and MIS.

The Company has established an Audit Committee to review and strengthen the adequacy of internal control. The internal auditors of the Company conduct audit of various departments based on an annual audit plan covering key are a of operations and reviews and evaluates the adequacy and effectiveness of internal controls, ensuring adherence to operating guidelines and systems and recommending improvements for strengthening them.

Human Resource Development

The Company has young, capable, experienced and dedicated manpower and various professionals support from in house and external sources with expertise in different areas leading the growth of Company towards better operational and financial position.

The number of employers as at 31st March. 2015 stood at 1788 (Previous Year 1243)

DEPOSITS

The Reserve Bank of India in exercise of its powers under The Reserve Bank of India Act, 1934, has granted NBFC-MFI (Serial No. B-14.01394) statutory to the Company and the Company has no public deposit. The Board of Directors of the Company has passed a resolution that the Company will not accept public deposit during 2015-16.

RESERVE BANK OF INDIA-REGISTRATION AND DIRECTIONS

Your Company has been following all relevant guidelines issued by Reserve Bank of India from time to time. The Company has decided not to accept the public deposits with effect from 20" November, 2004. The Company had intimated the same to Reserve Bank of India. Further, your Company has Capital Adequacy Ratio of 15.67% as on 31' March, 2015. The Reserve Bank of India on 27° November, 2014 issued Guidelines for Licensing of Small Finance Banks in the Private Sector. The object of Small Finance Banks shall be to primarily undertake basic banking activities of acceptance of deposits and lending to un served and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganized sector entities by provision of savings vehicles. There will not be any restriction in the are a of operations of small finance banks. The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). In pursuance to aforesaid guidelines the Company on 24" January, 2015 has applied with Reserve Bank of India for a License to operate as 'Small Finance Bank'.

CORPORATE GOVERNANCE

As required under Clause 49 (X) of the Listing Agreement entered into by the Company with the Stock Exchanges, a detailed report on corporate governance has been provided in a separate Section which forms part of this annual report The Company has complied with the requirements of Corporate Governance that have to be made in this regard. The requisite certificate from M/s A. K. Gangaher & Co., the statutory auditors of the company regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 is annexed to this report.

PARTICULARS OF EMPLOYEES

In terms of Section 197(12) of the Companies Act, 2013 read with Rule 5, Sub-Rule (1), (2) & (3) of Companies (Appointment & Remuneration) Rules, 2014. the necessary disclosures are annexed as Annexure IV with this report.

LISTING WITH STOCK EXCHANGES

Equity Shares of your Company were listed on Delhi Stock Exchange Limited, Ludhiana Stock Exchange Limited and Jaipur Stock Exchange Limited Securities and Exchange Board of India (SEBI) has derecognized all the three exchanges during the financial year 2014-15. The Board of Directors of the Company vide its meeting held on 26" May, 2014 approved the proposal of filing of application with BSE Limited in the interest of all stakeholders of the Company and filed the application on 3
Your Company has no dues pending with the above said Stock Exchanges

EXTRACT OF ANNUAL RETURN

In terms of requirement made under Section 92 and Section 134(3Xa) of the Companies Act. 2013 read with applicable rules of The Companies (Accounts) Rules, 2014, extract of annual return forms part of this Directors' Report and annexed as Annexure V.

OTHER INFORMATION

Information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3)(A)(B) of the Companies Accounts), RuIes,20I4

Particulars on Conservation of Energy, Technology Absorption

Being into the business of Non-Banking Financial Business activities, provision pertaining to conservation of energy, technology absorption are not applicable.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their gratitude for the cooperation received from lenders, our valued customers and shareholders. The Board, in successful wishes to plate on accord it since appreciation of the contribution made by all the employees towards growth of the Company.

For and on behalf of the Board of Directors

Place: Delhi (H P Singh)

Dated: 25th May. 2015 Chairman cum Managing Director


Mar 31, 2014

Dear Members,

The Directors take pleasure in presenting the Twenty Forth Annual Report of the Company together with the Audited Accounts for the financial year ended 31st March, 2014.

(Rs. In Lacs)

Particulars Current Year Previous year

Gross Income 19,165.49 9,433.06

Expenses 16,752.75 8,836.67

Profit before Depreciation and tax 2,412.74 596.39

Depreciation and NonCash Expenditure 71.47 61.36

Profit before Tax 2,341.27 535.03

Provision for Tax (including Deferred Tax and other adjustment) 785.51 145.20

Profit after Tax 1,555.76 389.83

Brought forward from Previous Year 1,014.46 702.60

Profit available for appropriation 2,570.22 1,092.43

Transfer to Statutory Reserve Fund 311.14 77.97

Proposed Dividend-Preference Share Capital @12.34% 6.49 -

Dividend Distribution Tax 1.10 -

Surplus carried to Balance Sheet 2,251.49 1014.46

OPERATIONS, PROSPECTS AND FUTURE PLANS

- After successful 2012-13, the financial year 2013-14 has also been a good year for the Company and your Company has performed better than previous year on most parameters. The Company remained focused on microfinance operations. The Company has expanded its outreach by increasing its penetration from existing branches and by opening new branches in the Northern / Central India primarily in the rural and semi urban areas to achieve its objective of financial inclusion. The Company has further strengthened its processes to provide better services to its borrower and maintain good portfolio quality. During the financial year 2012-13, the Company had started operation in the states of Jammu and Punjab and has good portfolio quality in these geographies. We are hopeful of achieving even better results in the current financial year.

- The Company has raised Rs. 1,120.74 Crores (Previous Year Rs. 708.92 Crores) during the financial year 2013-14 through term loan, cash credit limit, inter corporate deposit, Non Convertible Debentures and securitization/ assignment transactions. Your Company has been regular in discharging its liabilities to all lenders and is enjoying cordial relationship with all of them. The Company has for the first time raised Tier II Capital by issuing "12% Cumulative, Rated, Non Participative, Non Convertible and Compulsorily Redeemable Preference Shares".

- During the financial year, the Company has disbursed Rs. 1,22,920.28 Lacs (Previous Year Rs. 62,640.63 Lacs) showing a growth of 96.23% over the previous year. The gross income during the year has been Rs. 19,165.49 Lacs (Previous Year Rs. 9,433.06 Lacs) showing a growth of 103.17% over the previous year. The Net Profit after Tax has increased from Rs. 389.83 Lacs during the financial year 2012-13 to Rs. 1,555.76 Lacs during the financial year 2013-14 showing a growth of 299.09 %.

- Pursuant to provisions of Section 78 of the Companies Act 1956, during the year the Company has utilized an amount of Rs. 69.23 Lacs (Previous Year Rs. 129.23 Lacs) out of Securities Premium Reserves towards writing off the incidental expenditure incurred in issuing Rated, Listed, Secured, Redeemable Non Convertible Debenture and 12% Cumulative, Rated, Non Participative, Non Convertible and Compulsorily Redeemable Preference Shares.

- CARE has upgraded BASEL II andNCD rating of the Company from BBB- (Triple B Minus) to BBB (Triple B). The Grading of the Company is also upgraded from MFI 2 to MFI 2 in July, 2013. The Company has received MFT transparency certificate for the period August 2013 to August 2014.

- The Company has received Non Banking Finance Company - Microfinance Institution (NBFC-MFI) registration certificate dated 06th November, 2013 from the Reserve Bank of India.

- In order to retain its key employees the Board has decided to offer ESOP options to 29 staff members for 98,300 equity shares.

- During the financial year 2013-14, there is further clarity on the regulations for NBFC - MFIs which has improved the confidence of all stakeholders for the microfinance industry. Keeping in view all factors, the Company has budgeted moderate growth for the current financial year. The overall funding position has improved and we are hopeful of performing well during the current financial year.

SUBSIDIARY COMPANIES

The Company had no subsidiary company at any time during the financial year 2013-2014.

DIRECTORS

Shri Davis Frederick Golding retires by rotation and being eligible offers himself for his re-appointment. The Nomination Committee has recommended his re-appointment for consideration of the shareholders.

Shri Rakesh Sachdeva, Shri Sujan Singh Chawla, Shri Sundeep Kumar Mehta and Smt. Sangeeta Khorana are Independent Directors of the Company. As per their existing terms of appointment, the period of their office is liable to determination by retirement by rotation in terms of Section 152 of the Companies Act, 2013. Out of them, Smt. Sangeeta Khorana is liable to retire by rotation at this Annual General Meeting. Smt. Sangeeta Khorana joined the Company on 01st October, 2013 as an Additional Director and as per the provisions of Section 260 of the Companies Act, 1956. She will hold office as a Director only till the date of this Annual General Meeting. Brief resume of these Directors, their educational and professional qualifications, nature of their working experience, their achievements, name(s) of the companies in which they hold directorships, memberships and chairmanships in various Committees, their shareholding in the Company, relationship between directors inter-se are provided in Corporate Governance Report forming part of the Annual Report. The Nomination Committee has recommended their appointment for consideration of the shareholders.

Shri Ole Peder Sandsbraaten was appointed as an Additional Director of the Company in the Board meeting held on 26th May 2014. The tenure of his office as Director comes to an end at the commencement of the forthcoming Annual General Meeting of the members of the Company. The Nomination Committee has also recommended his appointment for consideration of the shareholders.

Shri Naresh Khanna has resigned from Directorship of the Company on 22nd November, 2013. The Directors wish to place on record their appreciation for the contribution made by Shri Naresh Khanna during his tenure.

During the year 4 (four) Board Meetings were held. These Board Meetings were held on 29th May, 2013, 09th August, 2013. 12th November, 2013 and 12th February, 2014.

STATEMENT ON DECLARATION "CERTIFICATE OF INDEPENDENCE" U/S 149 (6)

Pursuant to Schedule IV and Section 149(6) of the Companies Act, 2013, the Board has independent directors and there is appropriate balance of skills, experience and knowledge in the Board so as to enable the Board to discharge its functions and duties effectively. The independent directors has submitted a declaration that the independent directors meet with the criteria of independence as required under Section 149(6) of the Companies Act, 2013.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

As per the Companies Act, 2013, all companies having net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year will be required to constitute a corporate social responsibility (CSR) committee of the Board of Directors comprising three or more directors, at least one of whom will be an independent director. Aligning with the guidelines, we have constituted a committee comprising Shri H P Singh (Chairperson), Shri Rakesh Sachdeva, Smt. Deepa A. Hingorani and Smt. Sangeeta Khorana. The committee is responsible for formulating and monitoring the CSR policy of the Company. The Company is in the process of carving the role of the Committee which inter alia shall include to formulate and recommend to the Board, a CSR policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII of the Companies Act, 2013 and to recommend the amount of expenditure to be incurred and monitor the CSR policy of the company from time to time.

E-VOTING

The Company is providing e-voting facility to all members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014. The instruction(s) for e-voting is provided in the Notice.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR AND OTHER MATTERS PROVIDED UNDER SUB-SECTION (3) OF SECTION 178 OF COMPANIES ACT, 2013

The Company has a Nomination Committee comprising of Shri H P Singh, Shri Rakesh Sachdeva, and Shri Sundeep Kumar Mehta. Shri H P Singh is Chairman of the nomination committee. The nomination committee has been re-constituted with Shri Rakesh Sachdeva being the chairman of the committee and Shri H P Singh and Shri Sundeep Kumar Mehta as the members of the committee with effect from 26th May, 2014. The nomination Committee had formulated the selection crieteria for determining qualification, positive attributes and independence of directors and recommended to the Board of Directors a policy relating to the remuneration for the directors, key managerial personnel and other employees of the Company. The Board shall consider the same in due course of time.

EMPLOYEES STOCK OPTION PLAN:

a) As against 4,25,000 Equity Shares issued to Satin Employees Welfare Trust under Satin ESOP 2009, the Company granted only 1,50,000 Options to the below-mentioned employees as per the terms of Satin ESOP 2009 on 12th January, 2010:

S. No. Name of Employee No. of Options

i) Shri Jugal Kataria 1,00,000

ii) ShriVivekTiwari 50,000

Out of 1,50,000 Options granted to the above-stated employees,

First l/3rd of total options were vested to the said employees on 12th January, 2011 which was duly exercised by them on 12th January, 2011. Subsequently, 33,333 Equity Shares were transferred from Satin Employees Welfare Trust to Shri Jugal Kataria and 16,667 Equity Shares to Shri Vivek Tiwari pursuant to exercising of said options. Second l/3rd of total options were vested to the said employees on 12th January, 2012 which was duly exercised by them on 12th January, 2012. Therefore, 33,333 Equity Shares were transferred from Satin Employees Welfare Trust to Shri Jugal Kataria and 16,667 Equity Shares to Shri Vivek Tiwari pursuant to exercising of said options. Third l/3rd of total options were vested to the said employees on 12th January, 2013 which was duly exercised by them on 12th January, 2013. Hence, 33,334 Equity Shares were transferred from Satin Employees Welfare Trust to Shri Jugal Kataria and 16,666 Equity Shares to Shri Vivek Tiwari pursuant to exercising of said options.

As of now, entire shares are transferred to above employees of the Company and are now free from lock-in.

b) Further to above, the Company granted 98,300 Options against 4,25,000 Equity Shares issued to Satin Employees Welfare Trust under Satin ESOP 2009, to various employees as per the terms of Satin ESOP 2009 on 02nd December, 2013.

INFORMATION REQUIRED TO BE DISCLOSED UNDER SEBI (ESOS & ESPS) GUIDELINES, 1999

Initially, the Company had issued 4,25,000 Equity Shares of Rs. 10/- each at a Premium of Rs.10/- per share to Satin Employees Welfare Trust under Satin ESOP 2009 on 27th November, 2009 for holding shares on behalf of the Employees and to transfer the said shares to the eligible employees upon exercise of options.

The Company has further, allotted below-mentioned equity shares:

a. 1,00,000 equity shares of Rs. 10/- each at a premium of Rs. 12/- each to Satin Employees Welfare Trust under Satin ESOP 2010 scheme on 22nd June, 2010.

b. 1,50,000 equity shares of Rs. 10/- each at a premium of Rs. 15/- each to Satin Employees Welfare Trust under Satin ESOP II 2010 scheme on 21st April, 2011.

Details of stock options as required to be disclosed pursuant to Clause 12 of SEBI (ESOS & ESPS) Guidelines, 1999 as specified below:

S. No. Particulars Satin ESOP 2009 (Remarks)

1. Options Granted till date 2,48,300

2. Pricing Formula Rs. 20/- being the FaiT Value of the shares of the Company (Computed on the basis of Audited result FY 2008-09).

J. Options Vested 1,50,000

4. Options Exercised 1,50,000

5. Total no. of shares arising as a result 1,50,000 of exercise of options

6. Options lapsed NIL

7. Variation of terms of options Not Applicable

8. Money realized by exercise of options Rs. 30,00,000/-

9. Total no. of options in force 98,300

l0. Employee wise details of options granted to

10 (i) Senior Managerial Personnel 1. Shri Jugal Kataria (Chief Financial Officer) - 1,00,000

2. Shri Vivek Tiwari (Chief Operating Officer) -50,000

10 (ii) Any other employee who receives a Please refer the above Table grant in any year of option amounting to 5% or more of option granted during that year

10 (iii) Identified employees who were granted Please refer the above Table options, during any one year, equal to or exceeding 1% of the Issued Capital (excluding outstanding warrants and conversions) of the Company at the time of Grant.

11 Diluted Earnings Per Share (EPS) As all the shares have pursuant to issue of shares on exercise been allotted to the Satin of option calculated in accordance Employees Welfare Trust, with Accounting Standard 20. the EPS for the year ending 31st March, 2014 contains the effect of the same.

12. Where the company has calculated the The Company is calculating employee compensation cost using the employee compensation the intrinsic value of the stock options, cost by using the Fair value the difference between the employee of the shares. compensation cost so computed and Therefore, the requirement the employee compensation cost to disclose the difference that shall have been recognized if it between the employee had used the fair value of the options, compensation cost so shall be disclosed. The impact of this computed and the employee difference on profits and on EPS of the compensation cost 1S not company shall also be disclosed. applicable.

13. Weighted-average exercise prices Not Applicable. and weighted-average fair values of As The Shares of the options shall be disclosed separately Company are listed at DSE, for options whose exercise price either LSE and JSE that do not equals or exceeds or is less than the offer any trading platform market price of the stock therefore the market price of the shares is not available

14 A description of the method and Not Applicable significant assumptions used during the year to estimate the fair values of options, including the following weighted-average information:

(i) risk-free interest rate,

(ii) expected life,

(iii)expected volatility,

(iv)expected dividends, and

(v) the price of the underlying share in market at the time of option grant.

Particulars Satin ESOP 2010 Satin ESOP II2010 (Remarks) (Remarks)

Options Granted till Date Nil Nil

Pricing Formula Rs. 22/- being the Fair Rs. 25/- being the Fair Value of the shares Value of the shares of the Company, of the Company. (Computed on the (Computed on the basis of Audited basis of Audited result FY 2009-10) result FY 2009-10)

Options Vested Not Applicable Not Applicable

Options Exercised Not Applicable Not Applicable

total no. of share Not Applicable Not Applicable arising as a result of exer- cise of options

options lapsed Not Applicable Not Applicable

Variation of Not Applicable Not Applicable terms of option

Money Realized Not Applicable Not Applicable by exercise of option

Total No. of Not Applicable Not Applicable options in force

Employee wise details of options granted to

Senior Managerial Not Applicable Not Applicable Personnel

Any other employee who Not Applicable Not Applicable receive a grant in any year of option amounting to 5% or more of option granted during that year

Identified Not Applicable Not Applicable employees who were granted options, during any one year, equal to or exceeding 1% of the Issued Capital (excluding outstan- ding warrants and conversions) of the Company at the time of Grant.

Diluted Earnings Not Applicable Not Applicable Per Share (EPS) pursuant to issue of shares on exer- cise of option calculated in accordance with Accounting Standard 20. Where the company Not Applicable Not Applicable has calculated the employee compen sation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed.

Weighted-average Not Applicable Not Applicable exercise prices and weighted- average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock

A description of Not Applicable Not Applicable the method and significant assum ptions used during the year to estimate the fair values of options, including the following weighted-average information:

(i) risk-free interest rate,

(ii) expected life,

(iii)expected volatility,

(iv)expected dividends, and

(v) the price of the underlying share in market at the time of option grant.

DIVIDEND

The Company has accounted for in its financial statements the necessary Dividend for Fully Paid Up 12% Cumulative, Rated, Non Participative, Non Convertible, and Compulsorily Redeemable Preference Shares. Directors of your Company have recommended a final dividend of Rs.6,49,118 for Fully Paid 60,00,000 Preference Shares for the financial year 2013- 14, which is subject to your approval. The total dividend pay-out for the financial year will amount to Rs.6,49,118 (excluding dividend distribution tax). Further, in order to undertake and carry on future plans, it is necessary to conserve the resources. Your Directors are of the opinion of retaining the profits for the year within the Company, and thus have not recommended any dividend on equity shares for the year ended 31st March, 2014.

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Review

Satin Credit care Network Limited (SCNL) has received the fresh registration certificate from Reserve Bank of India as Non Banking Finance Company - Microfmance Institution (NBFC-MFI). It has reported satisfactory financial and operating performance during the financial year 2013-2014. The disbursement during the year has been Rs. 1,22,920.28 Lacs (Previous Year Rs. 62,640.63 Lacs). The Gross Income during the year has been Rs.19,165.49 Lacs (Previous Year Rs. 9,433.06 Lacs). Depreciation and Non Cash expenditure during the year has been higher at Rs. 71.47 Lacs (Previous Year Rs. 61.36 Lacs). The net prof1it after tax during the year has been at Rs. 1,555.76 Lacs (Previous Year Rs. 389.83 Lacs). SCNL's net worth stood at Rs. 14,558.52 Lacs (Previous Year Rs. 12,365.08 Lacs). The Company plans to concentrate only on Non Banking financial activities during the current financial year.

Resources and liquidity

During the year, the Company relied primarily upon Banks and Financial Institutions for its financial needs. The Company has been availing various credit facilities from Allahabad Bank, Ananya Finance for Inclusive Growth Pvt. Limited, Andhra Bank, AXIS Bank Limited, Bank of India, Bank of Maharashtra, BNP Paribas, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Development Credit Bank Limited, Dhanlaxmi Bank, HDFC Bank Ltd, ICICI Bank Limited, IDBI Bank Limited, IFMR Capital Finance Private Limited, Indian Bank, Indostar Private Limited, Induslnd Bank, ING Vysya bank, M. V. Microfinance Private Limited, Maanaveeya Development & Finance Private Limited, MAS Financial Services Limited, Oriental Bank of Commerce, Reliance Capital Limited, Small Industries Development Bank of India (SIDBI), Societe Generate, Standard Chartered Bank, State Bank of India, State Bank of Mauritius Limited, Syndicate Bank, The Hongkong & Shanghai Banking Corporation Limited, The Ratnakar Bank Limited, The South Indian Bank Limited, Union Bank of India and United Bank of India, Vrjaya Bank and Yes Bank Limited for its microfinance operation which is the main activity of the Company. The Company has raised debt funds through term loan, cash credit limit, Inter Corporate Deposit, listed Non Convertible Debenture and also raised funds through securitization / assignment transactions. The Company has for the first time raised Tier II Capital in the form of "12% Cumulative, Rated, Non Participative, Non Convertible, and Compulsorily Redeemable Preference Shares". In view of the overall environment in the Microfinance Industry in India and better regulatory clarity, the overall liquidity and funding to MFIs has further improved. The Company has been regular in repayment to all its lenders and has excellent relationship with all the financial institutions and banks and is quite hopeful of raising funds in future for growth.

Industry Scenario

The overall industry environment has further improved during the financial year 2013-14. The Reserve Bank of India has issued fresh registration certificates to microfinance institutions registered as non banking finance companies (NBFC-MFI). The Reserve Bank of India has issued number of circulars, directions and guidelines on working of NBFC-MFIs. This has improved the support and confidence of all stakeholders for the microfinance sector. However, the Parliament Panel has rejected Micro Finance Institutions (Development and Regulation) Bill, 2012.

Business Review

SCNL has emerged as the largest Microfinance Institution based in Northern India engaged in providing microcredit on joint liability basis and individual lending basis. The Company has expanded its operations in Bihar, Jammu and Punjab during last two years and the experience and portfolio quality has been good in these new states. This has helped the Company to diversify its geographical outreach. The Company is quite focused on its processes and control and has very good portfolio quality. There is huge demand and supply gap in Northern / Central India and hence opportunity to grow the portfolio. The overall funding to the sector has improved. The Company is hopeful of performing well in the current financial year.

Opportunities

For last many years, there has been focus of the Government and the Reserve Bank of India on financial inclusion and the role of MFIs have been accepted by everybody in achieving this objective. MFIs have played an important role in reaching the unreached and to provide them access to finance at affordable rates. In spite of all the focus, there is still a large segment of society, which does not have access to financial service from the formal financial institutions. The Company is operating in Northern and Central India and the reach of MFIs is comparatively less in these geographies as compared to the Southern and Eastern India and hence there is a huge opportunity to be tapped and large population to be served. The Company is making all efforts to use its experience of working in the same geography for last two decade.

Challenges

Microfinance Industry in India has gone through the most challenging times during the last three years. There was lack of regulatory clarity and perception of all stakeholders was negative towards the sector. There were news about multiple lending, excessive interest rates, coercive recovery practices, lack of transparency etc. in the media and hence the overall opinion of all stakeholders was not positive for the sector in spite of the fact that MFIs were providing credit to a large segment of the unbanked population. The funding to the sector (both debt and equity) was drying. The Reserve Bank of India has issued a series of circulars, directions and notifications to give the required regulatory clarity. The MFI industry has also collectively worked to bring back the confidence of all stakeholders by working responsibly. The issue of over ineptness has been addressed by using Credit Bureau report. The confidence of the stakeholders is increasing and the required debt and equity funding is now available.

The Company has a strong and experienced Board of Directors and senior management team, geographical advantage, time tested systems and processes, effective internal audit and risk department, association with a large number of lenders and clean repayment track record, good credit rating in the sector. This has helped the Company to perform well in comparison to its peers.

Outlook

The overall outlook for the Microfmance Industry has improved during the financial year 2013-14. The Reserve Bank of India has issued a number of circulars and provided the required regulatory clarity. Many domestic banks have restarted lending to the sector which has provided the much needed liquidity. The MFIs have also performed responsibly and hence the overall outlook of all stakeholders has become positive.

Risk & Concerns

The Company is exposed to risks like volatility in the Indian economy change in government policies, regulatory uncertainty, increasing borrowing cost, and competition from the banking sector / other MFIs, volatile economic cycle, market risks, concentration risks and credit risks. The Company manages these risks by maintaining a conservative financial profile and by following prudent business and risk management practices.

Adequacy of internal controls

SCNL has proper and adequate internal controls to ensure that all activities are monitored and controlled against any unauthorized use or disposition of assets and that all the transactions are authorised, recorded, reported and monitored correctly. The Company works in computerized environment and all its operations including accounts and MIS are electronic.

SCNL ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

An audit committee is in place to review and strengthen the adequacy of internal control.

Strengthening of internal audit and procedure is a continuous process.

Human Resource Development

SCNL has a team of young, able, experienced and dedicated team of professionals at all levels to support the management. The number of employees as at 31st March, 2014 stood at 1243 (Previous Year 877).

DEPOSITS

The Reserve Bank of India in exercise of its powers under The Reserve Bank of India Act, 1934, has granted NBFC-MFI (Seriol No. B-14.01394) status to the Company and the Company has no public deposit.

RESERVE BANK OF INDIA-REGISTRATION AND DIRECTIONS

Your Company has been following all relevant guidelines issued by Reserve Bank of India from time to time. The Company has decided not to accept the public deposits with effect from 20th November, 2004. The Company had intimated the same to Reserve Bank of India. The Company had submitted an application with Reserve Bank of India for certificate of registration for NBFC-MFI status pursuant to the circular issued by Reserve Bank of India vide its circular RBI/2012-13/319DNBS. CC.PD.No.312 /03rd October, 2001/2012-13 dated 07th December, 2012. The company has received the certificate of registration as NBFC-MFI on 06th November, 2013 (in lieu of old certificate of registration No. B-14.01394 dated 04th February, 2009) from the Reserve Bank of India. The Reserve Bank of India in exercise of its powers under The Reserve Bank of India Act, 1934, has granted NBFC-MFI (Seriol No. B-14.01394) status to the Company Further, your company has Capital Adequacy Ratio of 15.31 % as on 31st March, 2014.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000 the Directors confirm:

1. That in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanations relating to material departures;

2. That they have selected such accounting policies and applied them consistently except where otherwise stated in the notes on accounts, 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 at the end of financial year and of the profit of the Company for that period;

3. That they 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 frauds and other irregularities; and

4. That they have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

As required under Clause 49 (VI) of the Listing Agreement entered into by the company with the Stock Exchanges, a detailed report on corporate governance has been provided in a separate section which forms part of this annual report. The company has complied with the requirements of Corporate Governance that have to be made in this regard. The requisite certificate from M/s A. K. Gangaher & Co., the statutory auditors of the company regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 is annexed to this report.

AUDITORS & THEIR REPORT

M/s A. K. Gangaher & Co., Chartered Accountants, the existing auditors of the Company retire at the conclusion of this Annual General Meeting and being eligible, offer themselves for re-appointment. The retiring auditors have furnished a certificate of their eligibility for re-appointment under Section 139 (1) of the Companies Act, 2013 and Companies (Audit and Auditors) Rules, 2014. The same was discussed in the Audit Committee. Your directors recommend their reappointment. The Company has received audit report from M/sA. K. Gangaher & Co., Chartered Accountants and your Directors do not observe any adverse remark therein.

PARTICULARS OF EMPLOYEES

During the year under review, there was no employee who was getting remuneration of Rs. 5,00,000 per month / Rs. 60,00,000/- per annum or more as required under Section 217 (2A) of the Companies Act, 1956 and applicable provisions of the Companies Act, 2013 as amended/notified from time to time and also read with the Companies (Particulars of Employees) Rules, 1975 duly amended by Notification dated 31st March, 2011.

LISTING WITH STOCK EXCHANGES

Your Company is listed with following stock exchanges: For Non Convertible Debentures:

1. Bombay Stock Exchange Limited, Floor 25, P J Towers, Dalai Street, Mumbai - 400001 For Equity Shares:

1. Delhi Stock Exchange Limited, DSE House, 3/1 Asaf Ali Road, New Delhi - 110002.

2. Jaipur Stock Exchange Limited, Stock Exchange Building, Jawahar Lai Nehru Marg, Malviya Nagar, Jaipur - 302017.

3. Ludhiana Stock Exchange Limited, Feroze Gandhi Market, Ludhiana - 141001.

Your Company has paid up to date listing fee to each of above named stock exchanges.

OTHER INFORMATION

Information pursuant to clause (e) of sub section (1) of section 217 of the Companies Act, 1956 read with Companies (Disclosures of particulars in the report of Board of directors) Rules, 1988 being not applicable and hence not being disclosed.

FOREIGN EXCHANGE TRANSACTIONS

S.No. [Particulars Current Year (Rs.) Previous Year (Rs.)

Expenditure/Remittances (Outward) in Foreign Exchange

[Travelling Expenses 29,75,430.00 12,31,332.00l

Fees and Subscription 17,07,139.00 117,569.00

Earning/Remittances (Inward) in Foreign Exchange

Share Application Money NIL 30,00,00,177.00

ACKNOWLEDGEMENTS

Your Directors would like to place on record their gratitude for the cooperation received from lenders, our valued customers and shareholders. The Board, in specific, wishes to place on record its sincere appreciation of the contribution made by all the employees towards growth of the Company.

For and on behalf of the Board of Directors

Place: Delhi HP Singh

Dated: 26th May, 2014 (Chairman Cum Managing Director)

 
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