The Directors take pleasure in presenting the Twenty Sixth Annual Report of the Company together with the Audited Accounts for
the financial year ended March 31,2016.
FINANCIAL SUMMARY/HIGHLIGHTS, OPERATIONS, STATE OF AFFAIRS
(Rs. In Crores)
Particulars Current Year Previous year
Gross Income 558.52 3,24.16
Expenses 467.60 2,75.54
Profit before Depreciation and tax 90.92 48.62
Depreciation and amortization expenses 2.88 1.96
Profit Before Exceptional, Corporate
Social Responsibility Expense,
Extraordinary 88.04 46.66
Items And Tax
Exceptional Items - -
Profit Before Extraordinary Items,
Corporate Social Responsibility
Expense And Tax 88.04 46.66
Corporate Social Responsibility Expense 0.51 0.21
Extraordinary Items - -
Profit Before Tax 87.53 46.45
Tax Expense 29.59 14.73
Profit after Tax 57.94 31.72
Brought forward from Previous Year 47.00 22.51
Profit available for appropriation 104.94 54.23
Transfer to Statutory Reserve Fund 11.59 6.34
Dividend-Preference Share Capital @12.34% 0.49 0.74
Dividend Distribution Tax 0.10 0.15
Surplus carried to Balance Sheet 92.76 47.00
OPERATIONS, PROSPECTS AND FUTURE PLANS
During the year under review, your Company has done well on all parameters and grown the business substantially. The Company has
disbursed 1,688,914 loans totalling Rs. 3,606.11 Crores during the year ended March 31, 2016 against Rs. 2,365.76 Crores during
the previous year. The net outstanding portfolio (including managed portfolio and net of provisions) as at March 31,2016 is Rs.
3,248.01 Crores. Presently, total number of branches are 431 as at March 31,2016 as against 267 as at March 31, 2015. Satin
started its JLG operations from Uttar Pradesh and then extended it to Madhya Pradesh, Jammu & Kashmir, Uttrakhand, Bihar,
Maharashtra, Himachal Pradesh Rajasthan, Punjab, Haryana, Chandigarh, Chhattisgarh, Jharkhand, West Bengal, Delhi and Gujrat. The
Company''''s PAR > 60 is 0.24 % as of March 31, 2016 as against 0.12% for previous year. The Company has raised Rs. 80.00 Crores as
sub debt during the financial year 2015-16. During the financial year 2015-16, your Company had 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. The Company has introduced a loan product for solar lamp where the existing clients of Satin can avail a
product on installment from the nearby branches. The Company has also started Health & Sanitation loan from October 2015. The
Company has disbursed approx. Rs. 0.41 Crore on Health & Sanitation loan till March 31, 2016. 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. Employees are recruited from various sources and are
provided training to improve skills considering the job requirements at different levels. This has enabled the Company to reduce
cost and improve bottom line.
Your Company had submitted an application for converting into a Small Finance Bank (SFB) on January 28, 2015 as per the
''''Guidelines for Licensing of Small Finance Banks in the Private Sector'''' issued by the Reserve Bank of India (RBI) on November 27,
2014. The Reserve Bank of India (RBI), on September 16, 2015 granted "in-principle" approval to 10 applicants to set up small
finance banks. The 10 (Ten) applicants were chosen from the 72 (Seventy Two) applications received by the RBI. 8 (Eight) out of
10 (Ten) licenses have been given to Microfinance institutions. Some of the large Micro Finance Institutions (MFIs) have got the
in-principle approval to convert in Small Finance Bank. Your Company has not received the in principle approval to convert into
Small Finance Bank. However, the Board feels that there is good opportunity to grow the business without getting the banking
license in medium term.
Further, National Stock Exchange of India Limited has granted listing cum trading approval vide its Circular Ref. no. 847/2015
dated August 24,2015 for 29,081,361 Equity Shares of the Company from August 26,2015. Further, BSE Limited has accorded approval
for listing cum trading for 29,081,361 Equity Shares of the Company vide its letter Ref. DCS/DL/AU/TP/706/2015-16 dated October
16,2015 with effect from October 20,2015.
Particulars March 2016 March 2015
Number of branches 431 267
Amount disbursed (Rs. in Crores) 3,606.11 2,365.76
Number of active loan 18,51,113 11,90,999
Total Assets under management
including securitised and 3,248.01 2,126.01
assigned portfolio (Net of Provision)
(Rs. in Crores)
During the year 2015-16, the Company has raised borrowings of Rs. 2,105.45 Crore by way of Term Loans, Non-Convertible
Debentures ("NCDs"), Commercial Papers and Other working capital limits which was 38% higher as compared to Rs.1,522.79 Crore
raised during 2014-15. Further, the Company has raised Rs. 1,355.97 Crore by way of securitisation and assignment of receivables
which was 64% higher as compared to Rs. 828.30 Crore raised during 2014-15.
The Company already has borrowing arrangement with a large number of lenders and continuing on the track of diversification of
sources, the Company has initiated relationship with 13 new lenders including National Agriculture Bank of Rural Development
("NABARD") which has sanctioned and disbursed Rs. 150 Crore during the year. The Company has successfully placed its first
commercial paper of Rs.50 Crore and first senior unsecured Non-Convertible Debenture during the year. Further, the Company was
the first one to which Micro Units Developments and Refinance Agency ("MUDRA") Bank has sanctioned its first loan. The Company
has also raised subordinate debts of Rs. 80 Crore from institutional lenders which can be classified as Tier-II capital as per
The Company has raised funds through Private Placement by issuance of 61,00,000 equity shares to Promoters and SBIFMO Emerging
Asia Financial Services Pte. Ltd, resulting in a capital infusion of Rs.79.30 crore during the year. The net worth of the Company
& Subordinate Debt as on March 31, 2016 was at Rs. 324.01 crore and Rs. 162.22 crore respectively. Capital adequacy as on March
31,2016 was 16.82% well above the norm of 15% prescribed by RBI.
The Company has redeemed 60,00,000 Preference Shares (i.e. 12% Cumulative, Rated, Non-Participative, Non-Convertible, Compulsory
Redeemable Preference Share) of Rs. 10 Each vide Circular Resolution passed by the Board of Directors on November 24, 2015. The
total dividend pay-out for the period of 241 days (dividend payment date: November 27, 2015) amounted to Rs. 48.88 Lacs
(excluding dividend distribution tax).
The cost of borrowing of the Company has come down 14.29% in 2015-16 as against 15.01% in 2014-15. Reduction was primarily on
account of improved financial performance of the Company and diversification of the source of borrowings.
Company''''s Prospects, Future Plans and Business Overview:
The Business of your Company scaled up rapidly through increase in number of branches and employees of the Company. The Company
is expanding its business to new geographical territories. The Company is hopeful in achieving better performance during the
current year. It remains to be seen whether the lew of initiatives announced by the Central Government like ''''Make in India''''
programme, increased FDI limits in certain sectors, a financial inclusion effort through Pradhan Mantri Jan Dhan Yojana and
India''''s improved rating outlook gives a fillip to the performance of the financial sector in the coming year. Acknowledging that
Non-Banking Financial Companies (NBFCs) are engaged in financial lending to different sectors, the Finance Bill-2016 proposes to
extend the benefit to NBFCs. This is a welcome move as NBFC''''s account for a big chunk of lending in the country. From a period
of low growth, high inflation and shrinking production, the Central Government has not only strengthened macro-economic
fundamentals, but has also propelled the economy to a higher growth trajectory. Various rating agencies and think tanks have
predicted that India''''s growth would accelerate sharply in the next few years. There are some initial indication of interest rate
cut by few bankers, which may help the Company to reduce it''''s cost of borrowing. 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.
The Company also planning to enter into financing for Small and Medium scale enterprise (SME) segment to augment their financial
needs and to capture the gap available. The Company feels that SME segment is viable option to diversify portfolio and business
Please refer the Management Discussion and Analysis Report for more information on your Company''''s Business Overview.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has duly complied with the provision of Section 186 of the Companies Act, 2013 and Rules made thereunder. Details on
loans, guarantees or investment are mentioned in financial statements of this Annual Report.
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. The Company has an Internal
Control System, commensurate with the size, scale and complexity of its operations. Testing of such Control Systems forms a part
of Internal Audit (IA) function. The scope and authority of IA function is defined in the IA policy. The Internal Auditors of the
Company conduct audits of various departments based on an annual audit plan covering key area of operations. Internal Audit
reviews and evaluates the adequacy and effectiveness of internal controls, ensuring adherence to operating guidelines and systems
and recommending improvements for strengthening them. To maintain its objectivity and independence, the Internal Audit function
reports to the Chairman of the Audit Committee of the Board. Your Company has instituted various preventive or control measures
in the loan approval 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.
SUBSIDIARY AND ASSOCIATE COMPANIES
The Company has neither any subsidiary, associate Company nor any Joint Venture during the financial year 2015-16.
DIRECTORS AND KEY MANAGEMENT PERSONNEL (KMP)
Mr. Davis Frederick Golding (DIN.00440024) who liable to retire by rotation in the ensuing and being eligible offers himself for
re-appointment. Mr. Davis Frederick Golding is representing M/s ShoreCap II Ltd. on the Board of the Company and has shown his
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. Anil Kumar Kalra (DIN: 07361739)wasappointedasAdditionalDirectoronDecember08,2015. Pursuant to Section 149, 150, 152, 161 and
other applicable provisions of the Companies Act, 2013 and the Rules made thereunder, read with Schedule IV of the Companies Act,
2013, and as per Articles of Association of the Company, Mr. Anil Kumar Kalra appointed as anon- executive and independent
Director of the Company, who have submitted a declaration that he meets the criteria for independence as provided in Section
149(6) of the Companies Act, 2013. The Nomination & Remuneration Committee and the Board of Directors have also recommended his
appointment for consideration of the shareholders. Mr. Anil Kumar Kalra will be appointed as Independent Director of the Company
to hold office for a period of five years from the date of his 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.
Brief resume of these Director(s), 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.
Mrs. DeepaA. Hingorani (DIN: 00206310) (nominee director appointed by Danish Microfinance Partners KS), has tendered her
resignation from Company''''s Board and in her place, Mr. Kasper Svarrer (DIN: 072252475) has been introduced as an Additional
Director on the Board of the Company on August 12, 2015 to hold office upto the date of the next annual general meeting of the
Company ("AGM") or the last date on which the AGM should have been held, whichever is earlier and liable to retire by rotation.
The Directors has appreciated her contribution on the Satin Board. Further, Mr. Suramya Gupta (DIN: 06816354) (nominee director
of SBIFMO Emerging Asia Financial Sector Fund Pte. Ltd) appointed as an Additional Director on the Board of the Company on August
12,2015 to hold office upto the date of the next AGM of the Company or the last date on which the AGM should have been held,
whichever is earlier and liable to retire by rotation. Further, pursuant to the requirements of Section 161(3) of the Companies
Act, 2013 the designation of Mr. Suramya Gupta (DIN.06816354) and Mr. Kasper Svarrer (DIN: 072252475) were changed to Nominee
Director vide Board meeting held on November 04, 2015. It is pertinent to note that "Nominee Directors" appointed pursuant to
Section 161(3) of the Companies Act, 2013 are not subject to Shareholders'''' approval or confirmation (in terms of Section 161(3)
of the Companies Act, 2013) and liable to retire by rotation. After change of designation from Additional Director to Nominee
Director, appointment of Mr. Suramya Gupta (DIN.06816354) and Mr. Kasper Svarrer (DIN: 072252475) are not subject to
Further, pursuant to the requirements of Section 161(3) of the Companies Act, 2013 the designation of Mr. Davis Frederick Golding
(DIN.00440024), Mr. Richard Benjamin Butler (DIN.06574786) and Mr. Arthur Sletteberg (DIN.07123647) who were appointed as
Investor Directors on the Board of Directors of the Company for the Investments made by M/s ShoreCap II Ltd., M/s MV Mauritius
Ltd. and M/s NMI Fund III KS, respectively, were changed to Nominee Directors vide Board meeting held on November 04, 2015 as the
above said directors'''' being nominated on the Board by the various Investors (hereinafter referred to as their respective
organisations) for taking care and looking after the business operations of the Company to the extent and for the best interest
of their Investor Organisations.
During the year 4 (Four) Board Meetings were held. These Board Meetings were held on May 25, 2015, August 12,2015, November
04,2015 and February 10,2016.
PERFORMANCE EVALUATION OF BOARD, COMMITTEES AND DIRECTORS
The Board of Directors of the Company carried out annual evaluation of its own performance, its Committees and individual
directors based on criteria and framework adopted by the Board and in accordance with existing regulations. The manner of
evaluation was conducted after consideration of parameters through set of questioner(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 of each Director individually and of its various Committees 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 the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and
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
controls are 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 order passed by the regulators or courts or tribunal:
There are no material order passed by the regulators or courts or tribunals impacting the going concern status and Company''''s
operations in future.
RELATED PARTY TRANSACTIONS
During the financial year 2015-16, there is no materially significant related party transaction with the Company''''s promoters,
directors, the management or relatives which may have potential conflict with the interest of the Company at large. The Company
has also 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 available on the website of the Company i.e. www.satincreditcare.com.
Particulars of Contracts or Arrangements with related parties referred to in Section 188(1) is given in Form AOC- 2 as
Annexure-I. Further, details of Related P arty Transactions as required to be disclosed by Accounting Standard-18 on "Related
Party Transactions" specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules,
2014 are given in the Notes to the Financial Statements.
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 November 13, 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 (other than Investor''''s nominee) for each Board/Committee meeting(s) 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) read with Section 141 of the Companies Act, 2013 and Companies (Audit
and Auditors) Rules, 2014. The same was discussed in the Audit Committee meeting. Your directors 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 thereunder and on the recommendation of the Audit Committee,
the Board of Directors of the Company had appointed M/s S. Behera & Co. Company Secretaries (ICSI PCS Registration No. 5980) as
the Secretarial Auditor of the Company for the financial year 2015-16. Secretarial audit report as provided by M/s S. Behera &
Co. Company Secretaries is also annexed to this Report, in the prescribed Form No. MR-3, is annexed as Annexure-II.
Any member interested in hard copy of the Secretarial Audit Report may inspect the same at the Corporate Office of the Company or
write to the Company Secretary for a copy.
The Company has received consent from M/s S. Behera & Co. Company Secretaries, for their re-appointment for the financial year
2016-17. Your directors recommend their re-appointment.
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.
The Company has an Audit Committee in accordance with the provisions of Section 177 of the Companies Act, 2013 and in accordance
with Uniform Equity Listing agreement with the Stock Exchanges and as per other applicable laws. All members of the Committee are
financially literate within the meaning of the Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. 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 Regulation 18 of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and Uniform Equity Listing Agreements executed with the Stock exchanges read with
Section 177 of the Companies Act, 2013 and other applicable laws are approved by Board of Directors of the Company. 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.
The Company has accounted for in its financial statements the necessary dividend for 60,00,000 Fully Paid Up 12% Cumulative,
Rated, Non Participative, Non-Convertible, and Compulsorily Redeemable Preference Shares. Directors of your Company have
recommended an interim dividend Of Rs. 48,88,669/- (Rupees Forty Eight Lacs Eighty Eight Thousand Six Hundred and Sixty Nine
Only) (excluding dividend distribution tax). Further, pursuant to Section 55 of Companies Act, 2013 and rules made thereunder,
60,00,000 Fully Paid Up 12% Cumulative, Rated, Non-Participative, Non- Convertible, Compulsorily Redeemable Preference Shares
aggregating to amount Rs. 6,00,00,000 (Rupees Six Crore only) be redeemed out of the proceeds of a fresh issue of shares made for
the purpose of redemption on November 27,2015, the due date of redemption. These Preference Shares were redeemed on November 27,
2015. 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 March 31,2016.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors has constituted the Corporate Social Responsibility Committees vide resolution passed in its meeting held
on May 26,2014. 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 Crores or more during any financial year are 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. The CSR Committee vide its meeting dated February 09, 2015 approved and recommended to
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 February 09,2015 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.com.
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 Regulation 44 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. The
above Rule 20 of the Companies (Management and Administration) Rules, 2014 have been amended on March 19,2015 to introduce a new
concept of e-voting i.e. E-Voting at general meeting through an 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 e- voting facility for its general
meetings to enable its members to participate in the voting electronically. The instruction(s) for e-voting for ensuing Annual
General Meeting/Postal Ballot is also provided with notice to shareholders of this Annual Report.
EMPLOYEES STOCK OPTION PLAN
In order to develop and implement a long term incentive program to attract, motivate and retain the talent in a competitive
environment, the Company has formulated and implemented "Employees Stock Option Schemes (the Schemes)" which provides for grant
of equity shares of Satin Creditcare Network Limited to employees of the Company. These s chemes 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.
The Company had allotted 4,25,000 equity shares to Satin Employees Welfare Trust @ Rs. 20/- each (including premium of Rs. 10/-
each) on November 27, 2009. The Company had further allotted 1,00,000 shares to Satin Employees Welfare Trust @ Rs. 22/- each
(including premium of Rs. 12/- each) on June 22, 2010. The Company had further allotted 1,50,000 equity shares to Satin
Employees Welfare Trust @ Rs. 25/- each (including premium of Rs. 15/- each) on April 21, 2011.These shares were allotted at a
value which is over the fair market value of these share at the time of allotment and thus no expense has been recognized. As
against 4,25,000 Equity Shares issued to Satin Employees Welfare Trust 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 January 12, 2010. These options are vested and
exercised as per terms set out under ESOP 2009. Further, the Company has also granted 98,300 Options out of remaining 2,75,000
Equity Shares to various employees as per the terms of Satin ESOP 2009 on December 02,2013. Out of 98,300 shares granted, 29,090
options were vested and 25,824 were exercised on December 02, 2014 and 29,100 options were vested and 22,633 were exercised on
December 03,2015. 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.
DISCLOSURE UNDER SECTION 62 OF THE COMPANIES ACT, 2013, RULE 12 OF COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014, SEBI
(SHARE BASED EMPLOYEE BENEFITS) REGULATIONS, 2014 AND THE SEBI (EMPLOYEE STOCK OPTIONS SCHEME AND EMPLOYEE STOCK PURCHASE SCHEME)
GUIDELINES 1999, FOR THE YEAR ENDED MARCH31,2016
A. The Board of Directors of your Company has approved an Employees'''' Stock Option Scheme during the Year 2009 and 2010 in
accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (hereinafter referred to
as "SEBI Regulations") with the objective of strengthening employee bonds with the Company and creating a sense of ownership.
Your Board felt it appropriate to extend ESOPs to permanent employees in the management staff, including Managing Director and
Whole-time Director(s) in order to motivate and retain the best talent. Further, during the year the Company has not amended the
scheme as per the new regulations i.e. SEBI (Share Based Employee Benefit) regulations, 2014.
A. 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.
1. The Company had ''''nil''''share-based payment arrangements during the year ended March 31,2016.
2. The estimated fair value of each stock option granted in the general employee stock option plan is Rs.73.79. This was
calculated by applying Black Scholes pricing model. The model inputs were as follows:
Satin ESOP 2009
First Grant Second Grant Third Grant
Share Price at grant Date N.A N.A N.A.
Exercise price 20 20 20
Expected Volatility - - -
Expected Dividends - - -
Contractual Life 1.08 2.08 3.09
Risk Free Interest Rate 8.59% 8.48% 8.44%
3. The estimated fair value of each share granted in the executive stock plan is Rs. 73.79.
4. Other information regarding employee share-based payment plans is as below:
Inputs Year ended March
31, 2016 Year ended March
Expense arising from employee
share-based payment plans 3,780,469.00 Nil
Expense arising from share and
stock option plans Nil Nil
Closing balance of liability
for cash stock appreciation
plan Nil Nil
Expense arising from increase
in fair value of liability
for cash stock appreciation
plan Nil Nil
B. 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. Diluted EPS is Rs. 19.97.
Effects of Share Options on Diluted Earnings per Share (Accounting year April 01,2015 to March 31,2016)
Net profit for the year ended March 31, 2016 Rs. 573,521,264.37
Weighted average number of equity shares
outstanding during the year ended March
31, 2016 28,275,712 Shares
Average fair value of one equity share during
the year ended March 31, 2016 73.79
Weighted average number of shares under
option during the year ended March 31, 2016 447,417 Shares
Exercise price for shares under option
during the year ended March 31, 2016 20.00
Computation of earnings per share
Inputs Earnings Shares Earnings Per
Net profit for the year
ended March 31,2016 (Rs.) 573,521,264.37 - -
Weighted average number
of shares - 28,275,712 -
outstanding during year
ended March 31, 2016
Basic earnings per
share (Rs.) - - 20.28
Number of shares under
option - 447,417 -
Number of shares that
would have been issued
at fair value: - (29,126) -
Diluted earnings per
share (Rs.) 573,521,264.37 287,23,129 *19.97
*Average fair value of one equity shares for the year ended March 31, 2016: Rs.73.79
C. Details related to ESOS
(i) A description of each ESOS that existed at anytime during the year, including the general terms and conditions of each ESOS
Satin ESOP 2009 Satin ESOP I 2010 Satin ESOP II2010
No. Particular (Remarks) (Remarks) (Remarks)
a) Date of
approval June 01,2009 March 26,2010 December 15, 2010
b) Total number
under ESOS 4,25,000 1,00,000 1,50,000
requirements - - -
formula Rs. 20/- being
the Fair Rs. 22/- being
the Fair Rs. 25/- being
Value of the
shares of Value of the
shares of Value of the
the Company the Company. the Company.
(Computed on the (Computed
on the (Computed on the
basis of Audited
result basis of Audited
result basis of Audited
FY 2008-09). FY 2009-10) FY 2009-10)
e) Maximum term
granted 3 Years 3 Years 3 Years
f) Source of
secondary Primary Primary Primary
g) Variation in
options Not Applicable Not Applicable Not Applicable
(ii) Method used to account for ESOS: FairValue (Black Scholes Model).
(iii) Option movement during the year (For each ESOS):
Satin ESOP 2009 Satin ESOP I 2010 Satin ESOP II 2010
Particulars (Remarks) (Remarks) (Remarks)
Number of options
the beginning of
the period 2,49,176 1,00,000 1,50,000
Number of options
the year 0 0 0
Number of options
during the 6,467 0 0
Number of options
vested during the
year 29,100 0 0
Number of options
the year 22,633 0 0
Number of shares
arising as a
result of exercise 22,633 0 0
Money realized by
options (INR/Rs.) Rs. 4,52,660/- 0 0
it scheme is
directly by the
Loan repaid by
the Trust during
the year from 2,26,543 0 0
Number of options
the end of the 2,26,543 0 0
Number of options
the end of the 29,100 0 0
(iv) Weighted-average exercise prices:
- when the exercise price is equal/exceeds to market price.
- when the exercise price is less than market price- Rs. 20.00.
Weighted-average fair values
- when the exercise price is equal/exceeds to market price.
- when the exercise price is less than market price-Rs. 73.79.
(v) Employee wise details (name of employee, designation, number of options granted during the year, exercise price)
(a) Senior managerial personnel
Details of Shares vested to Senior Managerial Personnel during this financial year
No. Name of Employee Designation Number of Option Exercise Price
1 Shri Shirish
Chandra Panda Head Internal
Audit 3,167 Rs. 20/-
2 Shri Ajay Kumar Vice President
- HR 2,067 Rs. 20/-
Total 5,234 N.A.
(b) There is no employee has received a grant in any one year of option amounting to 5% or more of option granted during that
(c) There is no Identified employees who were granted option, 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.
(vi) A description of the method and significant assumptions used during the year to estimate the fair value of options including
the following information:
Necessary disclosures/details pursuant to SEBI (Share Based Employee Benefit) regulations, 2014 has been placed on the website
and weblink Of the same is www.satincreditcare.com.
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 Powers) Rules, 2014 and Clause 49 of Listing Agreement in its Board Meeting dated February 09,2015. The aforesaid policy
is revised on February 10,2016 in view of enactment of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 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 ethics 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 aspirations of human resources consistent with the goals of the Company and in terms of Section 178 of the
Companies Act, 2013 and the listing agreement as amended from time to time and Rules/Regulations/Guidelines /Notifications issued
by Securities and Exchange Board of India (SEBI) from time to time, this 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 February 09,
2015. The aforesaid policy is revised on February 10, 2016 in view of enactment of Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015. This policy shall act as a guideline for determining,
inter-alia, qualifications, positive attributes and independence of 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 periodically conduct familiarization programme for the
independent directors, their roles, rights, responsibilities in the Company, nature of the industry in which the Company
operates, business model of the Company, etc. The details of such familiarisation programmes is disclosed on the Company''''s
website i.e. www.satincreditcare.com.
Corporate Social Responsibility Policy:
Your Company has recognized importance of "Corporate Social Responsibility" (hereinafter referred to as ''''CSR'''') therefore it has
vide resolution passed in its Board Meeting dated May 26, 2014 has constituted the Corporate Social Responsibility Committee.
Corporate Social Responsibility Committee in its meeting dated February 09, 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, s o 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, healthcare, 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.
With a vision of transforming the lives of people from socially weaker and economically disadvantaged sections of society, the
Company is committed to ''''building possibilities'''' to enable them to improve by supporting them through programs in the domains of
education, healthcare and environment. As a part of its commitment to Corporate Social Responsibility, during the year, your
Company initiated projects for health improvement by contributing to eligible trust and other agencies.
During the year under review, your Company has spent Rs. 51.00 Lacs on CSR projects/programs. Your Company is in compliance with
the statutory requirements in this regard.
Risk Management Policy:
The Company has framed a policy as required under Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 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. The Internal Audit Team directly reports to the Audit Committee Of the Company. Significant audit
observations and follow up actions thereon are also reported to the Audit Committee. The Audit Committee reviews adequacy and
effectiveness of the Company''''s internal control environment and monitors the implementation of audit recommendations, including
those r elating to strengthening of the Company''''s risk management policies and systems.
Related Party Transaction Policy:
Related P arty Transaction Policy is adopted by the Board of Directors of the Company vide its meeting dated February 09,2015
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 aforesaid policy is
revised on February 10,2016 in view of enactment of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015. The objective behind framing the policy is to ensure that Related Party Transactions are managed
and disclosed in accordance with the strict legal and accounting requirements to which the Company is subject.
All Related P arty Transactions shall require approval of Audit Committee and s aid Committee will review and may amend this
policy from time to time. The policy on Related Party Transaction is posted on the website of the Company i.e.
Sexual harassment policy for women under The Sexual Harassment of Women at workplace (prevention prohibition and Redressal) Act,
Your company is committed to ensure fair and safe environment for its executives, staff and workers. In compliance of the Sexual
Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013, the company has adopted Sexual Harassment
Policy approved vide Board of Directors meeting held on February 09, 2015 which ensure a free and fair enquiry process with clear
timelines. Your Directors further state that during the year under review, there were no cases field pursuant to the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
MANAGEMENT DISCUSSION AND ANALYSIS
Resources and liquidity
In over 25 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. During the year, the Company has been availing various credit
facilities from Banks, domestic and international 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 listed/unlisted Non-Convertible Debenture,
Commercial Papers and Working Capital Facilities and also raised funds through securitization/assignment transactions. Total
borrowings of the Company as at March 31,2016 was Rs. 2,748.32 Crore including subordinate debt of Rs 162.22 Crore.
The Board of Directors of the Company vide its approval through circulation on June 03,2015, allotted 32,30,000 (Thirty Two Lacs
Thirty Thousand) Equity Shares of face value of Rs.10/- (Rupees Ten only) each fully paid-up for cash at an issue price of Rs.
130/- (Rupees One Hundred and Thirty only) including premium of Rs.120/- (Rupees One Hundred and Twenty only) and 28,70,000
(Twenty Eight Lacs Seventy Thousand) Fully Convertible Warrants each 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 Warrant
exercise price) of Rs.130/- each (Rupees One Hundred and Thirty only). Further, out of entire consideration payable towards
Equity Warrants i.e. Rs. 37,31,00,000/- (Rupees Thirty Seven Crore Thirty One Lakhs Only), the Company has received Rs.
9,32,75,000/- (Rupees Nine Crore Thirty Two Lakhs Seventy Five Thousand Only) i.e. 25% of issue price before allotment of Equity
Warrants. Further, to fuel the growth for the Company, the warrant holders had exercised option to convert all the warrants
issued to them and infused balance amount Rs. 27,98,25,000/- (Rupees Twenty Seven Crore Ninety Eight Lakhs Twenty Five Thousand
Only) i.e. 75% of issue price. These warrants were converted on February 10,2016 and March 21,2016.
Credit Analysis and Research Limited (CARE) has reaffirmed the Long Term Facilities Rating of SCNL of CARE BBB aggregating
The Company generally maintain enough liquidity in the system so as to meet requirement of funds for scheduled disbursements and
repayments to lenders for about 30-45 days. The Company has strong Asset Liability Maturity profile wherein the Company has
positive gap in all time buckets.
In view of the overall positive environment in the Microfinance Industry in India and better regulatory clarity, the overall
liquidity and funding to NBFC-MFI 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.
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 Developments and Refinance
Agency (Mudra), greater regulatory clarity, Reserve Bank of India (RBI) considering giving new licence for Small and Payment
banks etc. In view of the above, there are better days ahead for Indian Microfinance industry. Microfinance institutions have
never had it so good in the past six years, at least in terms of receiving funds. Banks have opened their purse strings to MFIs
more than ever with the sector showing steady traction backed by a strong regulatory framework. The Reserve Bank of India on
April 02, 2014 granted in-principle approvals to two institutions to start new universal banks in India. Commercial papers (CPs)
are unsecured money market instruments and help corporate borrowers diversify their sources of short-term funds. CPs are cheaper
than bank loans. The Reserve Bank of India has eased micro finance lending norm of maximum 4 per cent variance in interest rates
for small loans offered to clients living below double poverty line. Limit of the loan amount, for which the tenure of the loan
shall not be less than 24 months, has been raised to Rs. 30,000.00 from the present limit of Rs. 15,000.00.The RBI allowed NBFCs
to issue Masala Bond, rupee denominated overseas bonds to overseas investors and significantly relaxed a number of restrictions.
ECB limit has been increased up to USD 100 million from USD 10 million or equivalent under automatic route for micro finance
activities. The Reserve Bank of India, on August 19,2015 granted "in- principle" approval to 11 entities to set up ''''Payments
Banks'''' and on September 16, 2015 to 10 applicants to set up "Small Finance Banks". There were several developments at the
national level that have been geared towards making rapid strides towards more inclusive and strategic financial access.
Moreover, alongside increasing schemes and policies to target more segments of the "ultra-poor", there have also been initiatives
towards directed development programmes for the microfinance industry. The budget for the year 2016-17 had several announcements
and proposals by the central government which has positive impact and would be contributory factor for Microfinance sector in
The Company has done well during the financial year 2015-16 as compared to last year and it''''s peers in the industry. First time,
the Company has raised floating rate Tier-II Capital (Term Loan). Micro Units Developments and Refinance Agency (MUDRA) Bank has
sanctioned it''''s first loan of Rs. 35.00 Crores to the Company. The Company has started cashless disbursement in Gujarat. The
Company has introduced loan product for solar lamp where the existing clients of SCNL can avail a product from the nearby
branches. Satin has disbursed Rs. 14.03 Crores against 2,01,875 loans, for solar lamps as on March 31,2016 in the state of
Haryana, Bihar and Uttar Pradesh.
The Company has received s coring 8 out of 10 in Microfinance Code of Conduct Compliance Assessment (COCA) from "ICRA Management
Consulting Services Limited" on July 17, 2015. The Company has also received "Special Jury Award" 2015 for serving MSME''''s from
Chamber of Indian Micro Small & Medium Enterprises (CIMSME) and "India Iconic name in micro finance" Award- 2015 from
International Institute for Business Analysis (IIBA). The equity share of the Company got the listing approval from The Calcutta
Stock Exchange Limited (CSE) on May 19,2015, National Stock Exchange of India Limited (NSE) on August 26,2015 and BSE Limited
(BSE) on October 20,2015.
The Company has an experienced and stable management team and Board Of Directors. The Company is hopeful of performing well
during the current year.
Financial sector development provides small enterprises and households with market access leading to their inclusion in the
regional and ultimately the national economy. The Reserve Bank of India (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 where 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.
While the regulatory environment has improved the stakeholder''''s confidence still continue to be exposed to inherent risks in
business model. Given that the microfinance borrowers belong to low income segment, customers are more prone to default. Client
retention and acquisition are also concern for microfinance industry. Moreover, with MFI operations concentrated in specific
geographies, geographic concentration risks persist, these risks include natural disasters, social unrests, or political
upheavals. As the Company target to tap the opportunities by entering into new geographical areas, the Company encounter with
some key challenges with respect to meeting its expansion plans. Considering changes in state laws and with new partners in
industry, opening of new branches and split of existing branches is challenging task before the management. Further, as industry
is looking for more partners in coming time, talent acquisition and retention is also one of the major challenges. Training and
development for employees and security risk are other potential challenge for the management. The Company is also on verge of
shifting its technology base to improved system. The Reserve Bank of India has issued a series of circulars, directions and
notifications to give the required regulatory clarity. Also the MFI industry has 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, 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 which helped the Company to
achieve the performance better than its peers. 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
The overall outlook for the Microfinance Industry has improved during the financial year 2015-16. 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. More and m ore use of Aadhaar as KY C by the industry.
There is greater emphasis today on credit s core prior to disbursement of loans, 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.
With various schemes launched by Government for financial inclusion there is greater opportunities in microfinance sectors in the
years to come.
Risk & Concerns
The Company is exposed to financial, operational and political risks. Because an MFI''''s loan portfolio is its most valuable
asset, the financial risks i.e. credit, market, and liquidity are of greatest concern. 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 and to ensure that all the transactions are authorised,
recorded, r eported 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 Management Information System.
Company''''s Internal Audit department has an annual audit plan based on the risk profile of business activities of the
organization. The Company has established an Audit Committee to review and strengthen the adequacy of internal control. The
Audit Committee also meet the Company''''s Statutory Auditors to ascertain their views on the financial statements, including the
financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal
control and systems followed by the Company. The Management acted upon the observations and suggestions of the Audit Committee.
The Internal Auditors of the Company conduct audit of various departments based on an annual audit plan covering key area 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 employees as at March 31,2016 stood at 3,864 (Previous Year 1788).
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) status to the Company and the Company has no public deposit. The Board of Directors of the Company has passed are
solution that the Company will not accept public deposit during 2016-17.
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. Further, your Company
has Capital Adequacy Ratio of 16.82% as on March 31,2016. The Non-Banking Financial Company - Micro Finance Institutions (Reserve
Bank) - Directions, 2011 ("NBFC-MFI Directions") were issued in December 2011 by the Reserve Bank of India (RBI) pursuant to the
Reserve Bank of India Act, 1934 ("RBI Act").The Company satisfies these conditions and was re- classified as a Non-Banking
Financial Company - Micro Finance Institution ("NBFCMFI") on November 6,2013. As a result, the Company is required to comply with
the NBFC-MFI Directions. These Directions include guidelines on qualifying assets criteria, asset classification and
provisioning, pricing of credit, capital adequacy, multiple lending, over-borrowing, compliances and fair practices. The Company
generally complies all conditions and directions issued by RBI from time to time.
As required under Regulation 17 to Regulation 27 of SEBI (Listing Obligations and Disclosu