Note No.l General Information
Satin Creditcare Network Limited ("The Company") is a public limited company and incorporated under the provision of the
Companies Act, 1956. The Company is a non deposit accepting micro finance non banking financial company, registered as NBFC-MFI
with The Reserve Bank of India ("RBI").The Company is engaged in the micro-finance activities.
Note No.2 Significant Accounting Policies
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under historical cost convention in accordance with the generally accepted accounting
principles and the applicable accounting standards notified under Section 133 of the Companies Act,2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and relevant provision of the Companies Act, 2013 as applicable and the guidelines issued by the
Reserve Bank of India. Accounting policies have been consistently applied except where a newly issued accounting standard or a
guideline is initially adopted or a revision to the existing accounting standard requires a change in the accounting policy
hitherto in use. The management evaluates all recently issued or revised accounting standards on an ongoing basis.
All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule III to the
Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current, non- current
classification of assets and liabilities.
2. USE OF ESTIMATES
The preparation of financial statements is in conformity with the Indian Generally Accepted Accounting Principles (GAAP) and
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized
prospectively in current and future periods. Changes in estimates are reflected in the financial statements in which changes are
made and their effects disclosed in the notes to the financial statements.
3. TANGIBLE ASSETS
All Tangible assets owned by the Company are stated at historic cost less accumulated depreciation. Tangible assets acquired on
account of amalgamation are stated at the acquisition value agreed in the amalgamation agreement. Capital work in progress
comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not ready for their intended
use as at the Balance sheet date.
4. INTANGIBLE ASSETS
Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less
accumulated depreciation and impairments. Computer software cost are capitalized and amortised as prescribed in Schedule II of
Companies Act 2013.
Depreciation on tangible assets is provided on the Written-down method over the useful lives of assets estimated by the
Management. Depreciation for assets purchased/sold during a period is proportionately charged. Intangible assets are amortized
over their respective individual estimated useful lives on a written-down basis, commencing from the date the asset is available
to the Company for its use. The Management estimates the useful lives of the fixed assets as follows and which is also the useful
lives of the assets based on the Part C of the Schedule II of the Companies Act 2013:
Depreciation and amortisation methods, useful lives and residual values are reviewed at each financial year end.
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset''''s recoverable amount. An
asset''''s recoverable amount is the higher of an asset''''s net selling price and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or group of assets. Where the carrying amount of an asset exceed its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. In determining net selling price, recent market transaction are taken into account, if available. If
no such transaction can be identified, an appropriate calculation model is used.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(i) Investments that are readily realizable and are intended to be held for not more than one year from the date, on which these
investments are made, are classified as current investments. All other investments are classified as Long term investments.
(ii) The Company values its Investments based on the accounting standard issued by the Institute of Chartered Accountants of
India as under:
a. Investment held as long-term investments is valued at cost. Provision for diminution in value is not made unless there is a
permanent fall in their net realizable value.
b. Current investments are valued at lower of cost or net realizable value.
8. CURRENT ASSETS
A. TRADE RECEIVABLES:
Trade Receivables includes outstanding amounts pertaining to other services/activities undertaken by the Company.
B. PORTFOLIO LOANS:
Portfolio Loans have been classified as short term and long term loans & advances according to their tenure.
C. CASH & CASH EQUIVALENT:
Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash on hand, demand deposits with banks and other
short term highly liquid assets that are readily convertible into known amounts of cash and which are subject to insignificant
risk of changes in value.
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the
effects of transactions of non-cashnature and any deferrals or accruals of pastor future cash receipts or payments. The cash
flows from operating, investing and financing activities of the Company are segregated based on the information.
9. REVENUE RECOGNITION
(i) The Reserve Bank of India''''s prudential norms on income recognition and provisioning for bad and doubtful debts has been
(ii) Subject to the above, specific incomes have been accounted for as under:
a. Interest income on loans is recognized under the internal rate of return method on accrual basis except in case of
non-performing assets where it is recognized upon realization as per RBI norms.
b. Interest income on deposits with bank is recognized on a time proportion accrual basis taking into account the amount
outstanding and the rate applicable.
c. Loan processing fee is recognized as income on accrual basis.
d. Profit on securitization of loan portfolio through bankruptcy remote Special Purpose Vehicle (SPV) is recognized over the
residual life of the securitization transaction in terms of RBI Guidelines. Profit on sale of loan assets through direct
assignment, without any recourse obligation or otherwise is amortized over the residual life of the loan.Net loss, if any,
arising on account of securitization and direct assignment of loan assets is recognized immediately at time of sale.
e. Any other Income is accounted for as and when accrued.
10. ASSET CLASSIFICATION AND PROVISIONING NORMS
The Company being a NBFC-MFI adopts the following norms based on the guidelines/instructions issued by the Reserve Bank of
Asset Classification Norms:-
(i) Standard asset means the asset in respect of which no default in repayment of principal or payment of interest is perceived
and which does not disclose any problem nor carry more than normal risk attached to the business;
(ii) Non Performing asset means an asset for which interest/principal payment has remained overdue for a period of 90 days or
The aggregate loan provision is maintained by the Company at any point of time shall not be less than the higher of:-
a) 1% of the outstanding loan portfolio, or
b) 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of the
aggregate loan installments which are overdue for 180 days or more.
11. BORROWING COSTS
Borrowing costs, which are directly attributable to the acquisition /construction of fixed assets, till the time such assets are
ready for intended use, are capitalized as a part of the cost of assets.
Borrowing costs consist of interest and other borrowing costs that the Company incurred in connection with borrowing of the
funds. Interest cost is expensed off on the accrual basis. Other incidental borrowing costs namely Processing Fee, Due Diligence
charges and Stamp duty charges are amortized over the period of the loan in equal monthly installment. All other borrowing costs
other than mentioned above are expensed in the period they are incurred. In case any loan is prepaid/cancelled then the
unamortized borrowing cost, if any, is fully expensed off on the date of prepayment/cancellation. In case an unamortized
identified borrowing cost is outstanding at the year end, it is classified under loans and advances as unamortized cost of
12. FOREIGN CURRENCY
Transactions in foreign currency are recorded at the rates of exchange prevalent on the date of transaction. Exchange difference,
if any, arising from foreign currency transaction are dealt in the Statement of Profit & Loss at year end rates. Monetary items
(Payables, loans etc.) denominated in foreign currency are reported using the closing exchange rate on each Balance Sheet date.
13. SHARE/DEBENTURE ISSUE EXPENSES
All expenses pertaining to issue of share capital(both equity and preference share capital) and Debentures are adjusted/written
off with Securities Premium Reserve Account, if any, after the date of allotment as per the provisions of the Companies Act,
14. PROVISIONS AND CONTINGENT ASSETS/LIABILITIES
Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result
of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of
the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.
Further the company being aNBFC-MFI also complies with the guidelines issued by the Reserve Bank of India regarding the various
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the
Company or a present obligation that arises from past events where it is either not probable that the outflow of resources will
be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability. Contingent
liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the
15. EMPLOYEES RETIREMENT BENEFITS
Employee benefits includes provident fund, employee state insurance scheme, gratuity fund and compensated absences.
a) Short-term employee benefits including Salaries, short term compensated absences (such as a paid annual leave) where the
absences are expected to occur within twelve months after the end of the period in which the employees render the related
service, profit sharing and bonuses payable within twelve months after the end of the period in which the employees render the
related services and non-monetary benefits for current employees are estimated and measured on an undiscounted basis.
b) Defined Contribution Plan
Company''''s contribution paid / payable during the year to Provident Fund, Pension Fund and Employee State Insurance Scheme are
recognized in the statement of Profit and Loss based on amount of contribution required to be made and when services are rendered
by the employees.
c) Defined Benefit Plan
Liabilities for gratuity funded in terms of a scheme administered by the Life Insurance Corporation of India, are determined by
actuarial valuation on Projected Unit Credit Method made at the end of each Balance Sheet date, provision for liabilities pending
remittance to the fund is carried in the Balance Sheet.
d) Long term employee benefits
Liability for compensated absences is provided based on actuarial valuation carried out at the end of the financial period using
projected unit Credit Method and is not funded. Past services cost is recognized immediately to the extent that the benefits are
already used and otherwise is amortized on straight line base over the average period unit the benefits become vested. The
retirement benefits obligation recognized in the balance sheet represents the present value of the defined benefits obligation as
adjusted for unrecognized past service cost, as redeemed by the fair value of scheme assets.
Compensated absences which are not expected to occur within 12 months after the end of period in which the employee rendered the
related services are recognized as a liability at the present value of the defined benefits obligation as at the balance sheet
Actuarial gains and losses are recognized immediately in the statement of Profit and Loss as income or expense in the period in
which they occur. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the Balance Sheet date on Government bonds.
Tax expense for the period, comprising of current tax and deferred tax are included in the determination of the net profit or
loss for the period.
(i) Current tax expense is made based on the estimated tax liability as per the appropriate provisions of the Income Tax Act,
(ii) Excess/short provision of income tax relating to earlier years is disclosed separately in the accounts.
(iii) Deferred Tax Assets and Liabilities reflect the impact of timing differences between tax profit and book profit and is
accounted for using the tax rates and laws that have been enacted or substantially enacted as on balance sheet date. Deferred
Tax Assets are recognized to the extent there is reasonable certainty that sufficient future taxable income will be available
against which these assets can be realized. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets,
17. EARNING PER SHARE
In determining earning per share, the Company considers the net profit after tax and includes the post tax effect of any
extra-ordinary/exceptional item. The number of shares used in computing basic earning per share is the weighted average number of
shares outstanding during the period. The number of shares used in computing diluted earning per share comprises the weighted
average shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could
have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair value. Dilutive potential equity shares are deemed converted
at the beginning of the period, unless issued at a later date. The number of shares and potential dilutive equity shares are
adjusted for any stock splits and bonus shares issued effected prior to the approval of the financial statements by the board of
18. EMPLOYEE STOCK OPTION SCHEME (ESOS)
The Company has formulated Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Guidelines, 1999) as amended from time to time. These schemes provide for grant of options to employees
of the Company that vest in a graded manner and that are to be exercised within a specified period. Further, the new guidelines
by Securities and Exchange Board of India (SEBI) came into force i.e. SEBI (Share Based Employee Benefit) Regulations, 2014 (new
regulation) according to which certain modification were required to be made in the trust deed formulated under SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Guidelines, 1999). As a result of new Regulations coming into effect, the earlier
SEBI (Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999) Guidelines have been repealed. With the
evolution of new SEBI Law, the existing Employee Welfare Trust need was realigned, so as to abide by the requirements of the new
Regulations floated by the Market Regulator. Measurement and disclosure of ESOS is done in accordance with new regulation,
circulars/notifications issued by SEBI, from time to time and guidance note on Accounting for employee share based payments
issued by The Institute of Chartered Accountants of India.
The Company measures compensation cost relating to employee stock schemes accordingly as per the guidance note. The compensation
expense is recognized over the vesting period of the options..
Leases in which a significant portion of the risks and rewards of ownership are retained by the Lessor are classified as
operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis
over the period of lease.
Lease in which substantially all the risks and benefits incidental to ownership of leased assets are transferred to the Company
are classified as finance lease. Finance leases are capitalized at the inception of the lease at the lower of the fair value of
the leased asset and the present value of the minimum lease payments.
20. OPERATING CYCLE
Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash
or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets
and liabilities as current and non-current.