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Notes to Accounts of Satin Creditcare Network Ltd.

Mar 31, 2017

1. Relevant disclosures in terms of the ''Guidance note on accounting for employee share-based payments'' issued by ICAI or any other relevant accounting standards as prescribed from time to time.

i) The Company had nil share-based payment arrangements during the year ended March 31, 2017.

ii) The estimated fair value of each stock option granted in the general employee stock option plan is Rs. 420.75 as on December 02, 2016. This was calculated by applying Black Scholes Model of valuation. The model inputs are as follows.

iv) Diluted EPS on issue of shares pursuant to all the schemes covered under the regulations shall be disclosed in accordance with ''Accounting Standard 20 - Earnings Per Share'' issued by ICAI or any other relevant accounting standards as prescribed from time to time. For the current year, Diluted EPS is Rs.7.05 (Refer note 30 (6)).

2. The Company has Rs. 9,936,000.00 (Previous year Rs. 10,480,860.00) recoverable from Satin Employees Welfare Trust pursuant to ESOP schemes.

3. The Company has allotted 1,087,456 (Ten Lakhs Eighty Seven Thousand Four Hundred And Fifty Six Only) equity shares of Rs. 10/- each at an issue price of Rs. 457.82 per share including premium of Rs. 447.82 per share on preferential basis to persons and entities belonging to promoter and non-promoter group pursuant to swap of equity shares of the Company with the shareholders of Taraashna Services Limited, "TSL" (Previously known as Taraashna Services Private Limited) with an intent to make it a subsidiary of the company in accordance with the provisions of Chapter VII of SEBI (ICDR) Regulations, 2009. Accordingly, as per confirmation received from TSL, 7,977,239 (Seventy Nine Lakhs Seventy Seven Thousand Two Hundred and Thirty Nine only) equity shares were transferred to the Company, constituting 87.83% of the share capital of TSL and therefore becoming the subsidiary of the Company w.e.f. September 01, 2016.

4. The Company vide special resolution as approved by members of the Company in the annual general meeting held on July 30, 2016, came out with offer for Qualified Institutions Placement for an amount up to Rs. 250 Crores to Qualified Institutional Buyers in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosures Requirements) Regulations, 2009, as amended and in accordance with Chapter VIII of the SEBI ICDR Regulations. The Working Committee of the Board of Directors of the Company at its meeting held on October 3, 2016 approved the allotment of4,529,970 (Forty Five Lakhs Twenty Nine Thousand Nine Hundred And Seventy Only) Equity Shares of face value of Rs. 10/- each to qualified institutional buyers (QIBs) at the issue price of Rs. 551.88 per Equity Share (including a premium of Rs. 541.88), aggregating to Rs. 249,99,99,843.60 (Rupees Two Hundred Forty Nine Crores Ninety Nine Lakhs Ninety Nine Thousand Eight Hundred and Forty Three and Sixty Paise Only).

5. During the year, the Company has allotted 25,000,000, 12.10% Rated, Cumulative, Non-Participative, Non-Convertible, Compulsorily Redeemable Preference Shares of face value of Rs.10/- each fully paid-up for cash at an issue price of Rs. 10/- vide board resolution passed on June 10, 2016 in accordance with the provisions of Section 42, 55 and 62 of the Companies Act, 2013 read with Rules made there under of The Companies (Share Capital and Debentures) Rules, 2014.

1. During the year, there has been an addition of Rs. 2,943,150,090.52 in the share premium reserve on account of the following:

a) Issue of 1,087,456 equity shares to TSL at a premium of Rs.447.82.

b) Issue of4, 529,970 equity shares to QIB at a premium of Rs.541.88.

c) Exercise of27,243 equity shares under ESOP Scheme at a premium of Rs.53.79.

2. During the year, the Company utilized a sum of Rs. 132,015,058.00 (Previous year Rs.28,121,021.00) from Securities Premium Reserve towards writing off incidental expenditure pertaining to raising share capital and non-convertible debenture as per the provisions of Section 52 of the Companies Act, 2013.

3. The Company has Rs. 9,936,000.00(Previous year Rs. 10,480,860.00) recoverable from Satin Employees Welfare Trust pursuant to ESOP schemes.

4. There is an addition of Rs.99,888.00 in general reserve on account of 1,857 equity shares not exercised by employees under ESOP Scheme during the year.

5. Pursuant to the provision of section 45 (IC) of Reserve Bank of India Act, 1934, the Company has transferred Rs. 48,998,410.00 (Previous Year Rs.115,881,030.00) towards Statutory Reserve Fund.

6. During the financial year 2014-15, the Company has borrowed 10 million US Dollars from World Business Capital Inc for the period of eight years for the purpose of working capital as the External Commercial Borrowings (ECB) under the automatic route of the Reserve Bank of India. The repayment of principal and interest of the ECB is hedged against the foreign currency fluctuations as the Company has contracted the risk fluctuation with a commercial bank at a predetermined rate to settle the foreign exchange liability. The details of ECB as on March 31, 2017 is as follows:

At the year end, the Company as per the fair accounting practice and financial prudence has created a foreign exchange fluctuation reserve to reflect the difference in value of outstanding loan at the Balance Sheet date. This foreign exchange fluctuation reserve will be finally settled at the time of full and final settlement of ECB loan by the Company. The interest payment on this ECB loan is accounted for at the predetermined rate and out of which the payment is made to the borrower by the commercial bank as per contract and the total amount is charged to the statement of profit and loss as a part of interest cost.

6. As per the terms of issue regarding the Secured Redeemable, Non-Convertible Debentures, the security offered by the Company is the hypothecation of present and future receivable equivalent to the outstanding amount against each series of Non-Convertible Debenture. The above mentioned Non-Convertible Debentures are freely tradable and listed on the BSE Limited.

7. For ECB refer Note No.4 (6).

8. For Term loans refer Note No. 9 (1).

(ii) Gratuity

The employee''s gratuity fund scheme is managed by Life Insurance Corporation of India. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation:

(iii) Leave Encashment

The obligation for leave encashment is recognized based on the present value of obligation based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

1. For Provision for Leave Encashment and Gratuity refer Note No.6.

2. The provisioning norms of the Company during the year has been changed from higher of a) 1% of the outstanding loan portfolio excluding securitization to 1.75% of the outstanding loan portfolio including securitization 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. As a result, the impact of the percentage change from 1% to 1.75% on the changed portfolio by including securitization is Rs. 259,875,990.74. There has been a further increase in the provision by Rs. 30,587,352.42 due to the inclusion of securitized portfolio at 1%. Hence, the total effect in the statement of profit and loss account is Rs. 380,437,684.78 on standard and non-performing assets during the year.

The Company complies with the prudential norms of the Reserve Bank of India (RBI) with respect to income recognition, asset classification and provisioning. As per notification no. DNBR (PD) CC.No.047/03.10.119/2015-16 dated July 1 2015 updated as on April 20, 2016 issued by Reserve Bank of India, provision of higher of 1% of the outstanding portfolio as at March 31, 2017 or 50% of the aggregate loan installments which are overdue for 90 days and more and less than 180 days and 100% of the aggregate loan installments which are overdue for 180 days or more has to be maintained.

The provision made by the Company as on March 31, 2017 stands at Rs. 608,553,512.33 (Previous year Rs. 227,472,401.54) towards provision for non-performing assets and contingent provision against standard assets. This includes an amount of Rs.542, 529,998.73(Previous year Rs.206, 256,941.92) as Contingent provision against standard assets.

9. Due to demonetization, RBI vide its notification no. DBR.No.BP.BC.37/21.04.048/2016-17 dated November 21, 2016 has provided an additional 60 days for recognition of a loan account as substandard and this applies to all dues payable between November 1, 2016 and December 31, 2016. Further, an additional 30 days was provided in addition to 60 days and also to defer the down grade of an account that was standard as on November 1, 2016, but would have become NPA for any reason during the period November 1, 2016 to December 31, 2016, by 90 days from the date of such downgrade vide its notification DBR.No.BP.BC.49/21.04.048/2016-17 dated December 28, 2016.

Accordingly, the accounts aggregating to Rs.3,928,935,110.19 which would have become non-performing assets, due to demonetization impact over repayments by micro and SME borrowers, during the stated period have been classified as standard assets as on March 31, 2017.

10. In respect of Loan against Property, the Company has provided First Loss Default Guarantee in the form of Cash Collateral amount to Reliance Capital Limited ("RCL") for 5% of outstanding amount. In the event of the default by the customer in which the installment are overdue for a period exceeding 90 days, the Company stands as a guarantor to make good the loss to RCL. During the year, the Company has written off an amount of Rs. 19,083,042.00 (Previous Year Nil) in respect of loans which are overdue by more than 90 days, doubtful for recovery and as claimed by RCL.

11. In respect of securitization transactions, the Company has given First Loss Credit Enhancement by way of cash collateral to cover the losses due to defaults and prepayments which is a specified percentage of the pool principal. During the year, the Company has booked loss of Rs.38, 538,766.00 (Previous Year Nil) on one securitization transaction as the cash collateral has been revoked due to delay in recovery of payments during demonetization period.

12. During the year, the Company has changed its policy on write off of portfolio loans from an overdue of more than 180 days to an overdue of more than 360 days w.e.f. February 10, 2017. The impact of the deferment has been reduction in the write off amount by Rs.79, 940,138.55 as compared to previous year.

13. The company has changed its provision policy from higher of a) 1% of the outstanding loan portfolio excluding securitization to 1.75% of the outstanding loan portfolio including securitization 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. As a result, the impact of the percentage change from 1% to 1.75% on the changed portfolio by including securitization is Rs. 259,875,990.74. There has been a further increase in the provision by Rs. 30,587,352.42 due to the inclusion of securitized portfolio at 1%. Hence, the total effect in the statement of profit and loss account is Rs. 380,437,684.78 on standard and non-performing assets during the year.

Note No.30

14. Estimated amount of contract remaining to be executed on capital account and not provided for is Rs.955.47 Lacs (Previous Year Rs.709.38 Lacs).

15. The Company operates in a single reportable segment i.e. financing, which has similar risks and returns for the purpose of AS 17 on ''Segment Reporting'' specified under section 133 of the Companies Act 2013, read with Rule 7 of the Companies (Accounts) Rules 2014.The Company operates in a single geographical segment i.e. domestic.

Note: As provisions for gratuity and leave benefits are made for the Company as a whole, the amounts pertaining to the key Management Personnel are not specifically identified and hence are not included above.

16. Earnings Per Share:

In accordance with the Accounting Standard 20 of ''Earnings Per Share'' as notified by the Companies (Accounting Standards) Rules, 2015:

17. Additional disclosures as required by the Reserve Bank of India: -

(A) Disclosure as per circular no. RBI/2014-15/299 DNBR(PD) CC.No.002/03.10.001/2014-15, dated November 10, 2014 issued by RBI are as under:-

(vi) Details of financial asset sold to Securitization/Reconstruction Company for asset reconstruction:-

The Company has not sold financial assets to Securitization/Reconstruction Companies for asset reconstruction in the current and previous year.

(vii) Detail of non-performing financial asset purchased/sold:-

The Company has not purchased/sold non-performing financial asset in the current and previous year.

(ix) Exposures:-

(a) Exposure to Real State Sector:-Nil(Previous Year Nil)

(b) Exposure to Capital Market:-Nil(Previous Year Nil)

(x) Details of financing of parent Company product:-

This disclosure is not applicable as the Company does not have any holding/parent Company.

(xi) Registration obtained from other financial sector regulators:-

The Company is registered with following other financial sector regulators:

(a) Ministry of Corporate Affairs (MCA)

(b) Ministry of Finance (Financial Intelligence Unit)

(c) Securities and Exchange Board of India (SEBI)

(xii) Disclosure of Penalties imposed by RBI & other regulators:-

The RBI conducted the inspection of the Company during the financial year and the inspection report is pending to be received from RBI. No penalty has been imposed by RBI and other regulators.

(xiii) Related party transactions:-

Please refer Note No.30 (4)

(xiv) Rating assigned by credit rating agencies and migration of ratings during the year-

The Credit Analysis& Research Limited has reaffirmed the MFI grading, MFI 1, during the year.

During the year, the Company''s various instruments were rated, the details of these ratings are as under:-

18. With the enactment of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications issued by Ministry of Corporate Affairs, the Company has undertaken activities as per the Corporate Social Responsibility ("CSR") Policy. During the financial year 2016-17, the Company has incurred a sum of Rs. 10,500,000.00 (Previous Year 5,100,000.00) towards corporate social responsibilities in accordance with section 135 of the Companies Act 2013.

L1. The figures of the previous year have been regrouped / reclassified wherever necessary to make them comparable with the figures of the current year.


Mar 31, 2016

1. Terms/rights attached to equity shares.

The Company has only one class of equity shares having par value of
Rs.10/- per shares. Each holder of equity shares is entitled to one vote
per share. Any dividend, if proposed by the Board of Directors is
subject to the approval of shareholders.

2. Satin Employees Welfare Trust has transferred 1,98,457 Equity
Shares to various employees of the Company. At present, Satin Employees
Welfare Trust holds 2,26,543 equity shares under Satin ESOP 2009 and
1,00,000 equity shares under Satin ESOP 2010 and 1,50,000 equity shares
aggregating to 4,76,543 Equity Shares as on 31st March, 2016.

a) Employee stock option schemes:

Satin ESOP 2009: 4,25,000 equity shares of Rs. 20/- each (including
premium of Rs. 10/- each) were allotted to Satin Employees Welfare Trust
on 27th November 2009. Out of which 1,50,000 Options were granted to 2
employees on 12th January 2010. The entire options are properly vested,
and exercised by the employees and accordingly transferred to their
DEMAT account. The Company has also granted 98,300 Options to 29
employees on 02nd December, 2013. Out of 98,300 Equity Shares, 25,824
Equity Shares were exercised and transferred to 25 Employees in
Financial Year 2014-15 and 22,633 Equity Shares were exercised and
transferred to 23 Employees in Financial Year 2015-16.

Satin ESOP 2010: 1,00,000 equity shares of Rs. 22/- each (including
premium of Rs. 12/- each) were allotted to Satin Employees Welfare Trust
on 22nd June, 2010.

Satin ESOP II2010: 1,50,000 equity shares of Rs. 25/- each (including
premium of Rs. 15/- each) were allotted to Satin Employees Welfare Trust
on 21st April, 2011.

4. The Company has Rs. 10,480,860.00 (Previous year Rs. 10,933,520.00)
recoverable from Satin Employees Welfare Trust pursuant to ESOP
schemes.

5. During the year Company has allotted 3,230,000 Equity Shares of
face value of Rs. 10/- each at an issue price of Rs.130/- including a
premium of Rs.120/- each to the persons belonging to promoter and
non-promoter group and 2,870,000Fully Convertible Warrants were also
allotted to the same persons at an issue price of Rs.130/- each
convertible into or exchangeable for one Equity Shares of face value
of Rs. 10/- each within 18 months from the date of Allotment i.e. June
3,2015.

6. Further, the person to whom the warrants were allotted on June 3,
2015 have exercised their option for exchange of warrants into Equity
Share and accordingly the Company has allotted 1,470,000 Equity Shares
pursuant to conversion of equivalent number of warrants to persons
belonging to Promoters Group vide resolution passed by the Board of
Directors in their Meeting held on February 10,2016.Further, 1,400,000
Equity Shares were also allotted pursuant to conversion of equivalent
number of Warrants vide resolution dated March 21, 2016 passed by the
Working Committee of the Board of Directors.

The objective of preferential allotment of equity shares is to fund the
growth and operations of the Company. A portion of the proceed of
investment received from the concerned promoters was used to redeem 12%
Cumulative, Rated, Non- participative, Non-Convertible, Compulsory,
Redeemable 6,000,000 Preference Shares on November 27,2015

1. For Provision for Leave Encashment refer Note No.6.

2. As per prudential norms prescribed by the Reserve Bank of India on
income recognition and provisioning for Standard/Non-Performing Assets,
a provision of Rs. 227,472,401.54 (Previous year Rs. 146,447,720.22)
stood at 31st March 2016 towards provision for non-performing assets
and contingent provision against standard assets. This includes an
amount of Rs. 206,256,941.92(Previous year Rs. 144,329,067.41) as
Contingent provision against standard assets as per notification no.
BNBR.009/CGM(CDS)-2015 dated March 27th, 2015 issued by Reserve Bank
Of India. As per the said notification the same has been shown as
"Provision for Non-Performing Assets and Contingent provisions against
Standard Assets" under "Short-Term Provisions".

3. The Company has followed the following provisioning norms during
the current and previous year:

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.

7. With the enactment of the Companies Act, 2013 and the Companies
(Corporate Social Responsibility) Rules, 2014 read with various
clarifications issued by Ministry of Corporate Affairs, the Company has
undertaken activities as per the Corporate Social Responsibility
("CSR") Policy. During the financial year 2015-16, the Company has
incurred a sum of Rs. 5,100,000.00 (Previous Year 2,064,260.00) towards
corporate social responsibilities in accordance with section 135 of the
Companies Act 2013.

8. The figures of the previous year have been regrouped/ reclassified
wherever necessary to make them comparable with the figures of the
current year.


Mar 31, 2015

1. In the opinion of the Management, amount receivable under Loan contracts are good for recovery unless otherwise stated. An amount of Rs 9,70,65,587.70(Pervious Year —Rs. 9,09,45,042.44) leaden will lach off/ provided financially the opinion of management, the amounts written off as bad debts are not recoverable despite various steps taken by the Company

2. For Provision for Standard/Non Performing Assets, refer Note No.9(2).

3. Estimated against of contract remaining to be executed on capital account and not provided for Rs.306.74 Lacs (Previous Year Rs.401.49Lack).

4. The Company operates in a single reportable segment i e. financing, which has similar risks and returns for the purpose of AS 17 on 'Segment Reporting' specified under section 133 of the Companies Act 2013,read with Rule 7 of the Companies (Accounts) Rules 2014.The Company operates in a single geographical segment i e. domestic.

5. The Company has not discontinued any operations hence there is no profit/loss on this account.

6. Based on the information available with the company, there is no outstanding dues to suppliers registered under "The Micro, Small and Medium Enterprises Development Act 2006 as at 31st March 2015 (Previous year Nil)

7. Additional disclosures as required by the Reserve Bank of India: -

(A) Disclosure as per circular no. RBI/2014-15/299 DNBR(PD) CC. No. 002/03.10.001/2014-15, dated 10th November 2014 issued by RBI are as under:-

(i) Exposures

(a) Exposure lo Real Stale Sector:-NU (Previous Year Nil)

(b) Exposure to Capital Market-Nil (Previous Year Nil)

(ii) Details of financing of parent Company product:-

This disclosure is not applicable as the Company does not have any holding' parent Company.

(iii) Registration obtained from other financial sector regulators:-

The Company is registered with following other financial sector regulators :

(a) Ministry of Corporate Affairs

(b) Ministry of Finance (Financial Intelligence Unit)

(iv) Disclosure of Penalties imposed by RBI & other regulators

The RBI conducted the inspection of the Company during the financial year, their findings have been suitably addressed and replied No penalty has been imposed by RBI and other regulators.

(v) Related party transactions s- Please refer Note No.26(4).

(vi) Rating assigned by credit rating agencies and migration of ratings during the year-

The Company has received a credit rating BBB-
8. With the enactment of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various classifications issued by Ministry of Corporate Affairs, the Company has undertaken activities as per the Corporate Social Responsibility ("CSR") Policy. During the financial year 2014-15, the Company has incurred a sum of Rs. 20,64,260.00 towards corporate social responsible liabilities in accordance with section 135 of the Companies Act 2013.

9. The figures of the previous year have been regrouped / reclassified wherever necessary to make them comparable with the figures of the current year.


Mar 31, 2014

Note No.1

1. Estimated amount of contract remaining to be executed on capital account and not provided for Rs. 401.49 Lacs (Previous Year Rs. 18.83 Lacs).

2. Contingent Liability: On account of guarantees given by the Company:

(Rs.in Lacs)

Particular, As at 31.03.20141 As at 31.03.20131

On account of managed portfolio 3,425.08 2,270.25

Income Tax pending appeal 2.47 -

Total 3,427.55 2,270.25

3. The Company mainly operates in only one segment - Microfmance Loans, hence the Accounting Standards - 17, as notified in Companies (Accounting Standard Rules, 2006) on segment reporting is not applicable to the Company.

4. Related party disclosures in terms of Accounting Standard 18 issued by The Institute of Chartered Accountants of India is as follows:

5. Earnings Per Share

In accordance with the Accounting Standard 20 of 'Earnings Per Share' as notified by the Companies (Accounting Standards) Rules, 2006:

6. The Company has not discontinued any operations hence there is no profit/loss on this account.

7. Based on the information available with the company there is no outstanding dues to suppliers registered under "The Micro, Small and Medium Enterprises Development Act 2006" as at 31st March, 2014 (Previous year Nil).

8. Additional disclosures as required by the Reserve Bank of India: -

(a) Disclosure as required by Paragraph 10 of Non Banking Financial (Non - Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 is as under:

9. The figures of the previous year have been regrouped / reclassified wherever necessary to make them comparable with the figures of the current year.

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