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NSE
275.35
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-3.55 -1.27%

Updated:20 Aug, 2019, 15:59 PM IST

BSE
271.70
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-6.05 -2.18%

Updated:20 Aug, 2019, 16:01 PM IST

Board's Report

Dear Members,

Your Directors takes pleasure in presenting the Twenty Fifth Annual Report of the Company together with the Audited Accounts for  the financial year elided 31st March, 2015

OPERATIONS, PROSPECTS AND FUTURE PLANS

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

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

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

During the year the authorized share capital of the Company was reclassified vide approval of equity shareholders through Extraordinary General Meeting held on 13th March, 2015 from RSL 130,00,00,000/– (Rupees One Hundred and Thirty Crore) divided into 3.00,00,000 (Three Crore) Equity Shares of Rs. 10/– (Rupees Ten only) each and 10,00,00,000 (Ten Crore) Preference Shares of Rs. 10/– (Rupees Ten only) each to Rs. 130,00,00,000/– (Rupees One Hurdrcd and Thirty Crore) divided into 4,00,00,000 (Four Crore) Equity Shares of Rs. 10/– (Rupees Ten only) each ("Equity Shares") and 9,00,00.000 (Nine Crore) Preference Shares of Rs. 10/– (Rupees Ten enly) each ("Preference Shares'^. Further, the Company has obtained the approval of equity shareholders through Extraordinary General Meeting held on 13 th March, 2015 for allotment of up to 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) to the Promoters and Non–Promoters.

Further, the Company has obtained the approval of shareholders through Extraordinary General Meeting held on 13 th March, 2015 for allotment of up to 28,70,000 (Twenty Eight Lacs Seventy Thousand) fully convertible Warrants ("Equity Warrants") to the persons belonging to the Promoter as well as Non–Promoter Category, cach convertible into, or exchangeable for, one Equity Share of face value of Rs.lOi/– (Rupees Ten only) each at a price (including the Equity Warrant subscription price and the Equity Warrant exercise price) of Rs. 130/– cach (Rupees One Hundred and Thirty only) cach and to issue fresh Equity Shares on the conversion of the

Equity Warrants subject to terms and conditions determined by the Board. The objective of Preferential allotment of equity shares and equity warrants :s to fund the growth and operations of the Company, including growing the loan book, operating expenses, marketing expenditure, working capital and for augmenting the nlirastrueture of the Company, provided however, that a portion of the proceeds of investment received from the concerned promoters shall be used to redeem 12% Cumulative, Rated, No participative,

Non–convertible, Compulsorily redeemable 60,Of1,000 (Sixty Lacs) existing Preference shares. The due date of redemption is 27th November 2015. Pending utilization of such proceeds for the redemption of aforesaid Preference shares, the Company shall, subject to applicable law, invest the funds in high quality interest bearing liquid instruments and deposits with the banks for the applicable period until the due date of redemption of Preference shares. However the in–principle approval from Stock Exchange is pending.

Company's Prospects, Future Plans and Business Overview:

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

PARTICULARS O F LOANS, G U A R A N T E E S O R I N VESTM E N T S

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

DETAILS O F ADEQUACY O F I N T E R N A L F I N A N C I A L C O N T R O L S

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

The Company has continued its efforts to align its processes and controls with best practiccs and has put in place a process wise internal control framework across the Company. The Internal Auditors of the Company conduct audits of various departments based on an annual audit plan covering key area of operations. Internal Audit reviews and evaluates the adequacy and effectiveness of internal controls, ensuring adhcrcncc to operating guidelines and systems and recommending improvements for strengthening them.

There was no material event recorded subsequent to the date of financial statements

SUBSIDIARY AND ASSOCIATES COMPANIES

The Company doesn't have any Subsidiary, Associate Company and Joint Venture during the financial year 2014–15. Further, since the Company has no subsidiary, the requirement of formulation of policy for determining 'material' subsidiaries" under clause 49(V) of the Equity Listing Agreement is not applicable.

D I R E C T O R S AND K E Y M A N A G E M E N T P E R S O N N E L ( K M P )

Mr. Richard Benjamin Butler (DIN: 06574786) retire by rotation and being eligible offers himself for re–appointment. Mr. Richard Benjamin Butler is representing M V Mauritius Limited on the Board of the Company and has shown interest for his re–appointment.

The Nomination & Remuneration Committee and the Board of Directors have recommended his re–appointment for consideration of the shareholders.

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

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

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

MANNER I N WHICH F O R M A L ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCEAND THAT O F I T S C O M M I T T E E A N D INDIVIDUIVLDIRECTOR

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

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

Pursuant to Schedule IV and Section 149(6) of the Companies Act, 2013, the Board has independent directors and there is appropriate balance of skills, experience and knowledge in the Board so as to enable the Board to discharge its functions and duties effectively.

The independent directors have submitted a declaration that the independent directors meet with the criteria of independence as required under Section 149(6) of the Companies Act, 2013.

DIRECTOR'S RESPONSIBILITY STATEMENT

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

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

2. That the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

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

4. That the directors had prepared the annual accounts on t 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 arc adequate and were operating effectively; arid

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

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

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

RELATED PARTYTRANSACTIONS

During the financ.al year 2014–15, there is no materially significant related party transaction with the Company's promoters, directors, the management, their subsidiaries or relatives which may have potential conflict with the interest of the Company at large.

The necessary disclosures regarding the related party transactions are given in the notes to accounts. The Company has formulated a policy on dealing with the Related Party Transactions and necessary approval of the Audit Committee and Board of Directors were taken wherever required in accordance with the Policy. The Company has also formulated a policy for determining the material related party transactions and the details of such policies for dealing with related party transactions are disseminated on the website (under reports and disclosures section) of the Company www.satincreditcare.com

Particulars of Contracts or Arrangements with related parties referred to in Section 188(1) is given in Form AOC– 2 as Annexure – 1 .

Justification for entering into related party transactions:

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

AUDITORS & THEIR REPORTS

Statutory Auditors & their Report:

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

The same was discussed in the Audit Committee meeting. Your 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 there under and on the recommendation of the Audit Committee, the Board of Directors of the Company have appointed M's S. Bchcra & Co. Company Secretaries (ICSI PCS Registration No. 5980) as the Secretarial Auditor of the Company for the financial year 2015–2016. The Company has received consent from M/s S. Bchcra & Co. Company Secretaries, for their appointment.

The Board of Directors has appointed M/s S. Behera & Co. Company Secretaries (ICSI PCS Registration No. 5980) as the Secretarial Auditor of the Company in relation to the financial year 2014–15. The Sccrctirial Audit for financial year 2014–15 was conducted and the report is available on the Company's website www.satincreditcare.com Any member interested in hard copy of the Secretarial

Audit Report may inspect the same at the Registered Office of the Company ar write to the Company Secretary for a copy. Secretarial audit report as provided by M/s S. Behera & Co. Company Secretaries (ICSI PCS Registration No. 5980) is also annexed to this Report as Annexurc–II.

Qualifications in Audit Reports:

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

AUDIT COMMITTEE

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

DIVIDEND

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

CORPORATE SOCLVL RESPONSIBILITY

As per Section 135 of the Companies Act, 2013, all companies having net worth of Rs. 500 Crore or more, or turnover of Rs. 1,000 Crore or more or a net profit of Rs. 5 Crore or more during any financial year will be required to constitute a Corporate Social Responsibility (CSR) committee of the Board of Directors comprising three or more directors, at least one of whom will be an independent director. To meet the requirement of provisions o: Sections 135 of the Companies Act 2013, and read with The Companies (Corporate Social Responsibility Policy) Rules, 20.4 and Schedule VII o f t h e Companies Act 2013, the Board of Directors has constituted the Corporate Social Responsibility Committees vide resolution passed in its meeting held on 26th May, 2014. The CSR Committee vide its meeting dated 09th February, 2015 approved and recommcnded to the Board for its approval a policy known as CSR policy, which indicates the activities to be undertaken by the Company as specified under Schedule VII of

Companies Act, 2013. Further, the Company in its Board meeting catch 09th February, 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. www4iatincreditcare.com

The Company is providing c–voting facility to all members to cnatlc them tc cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and

Administration) Rules, 2014 and Clause 35B of the Listing Agreement. The above Rule 20 of the Companies (Management and Administration) Rules, 2014 have been amended on 19thMarch, 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 c–voting facility for its last three general meetings to enable its members to participate in the voting electronically. The instructions) for e–voting for ensuing Annual General Meeting is also provided with notice to shareholders of this Annual Report.

E M P L O Y E E S STOCK O P T I O N PLAN:

As against 4,25,003 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 12 th January, 2010. These Options arc vested and exercised as per terms set out under ESOP 2009. As of now, 1,50,050 shares ire transferred to employees and are now free from locking. Further, the Company granted 98,300 Options out of remaining 2~> 5,000 Equity Shares to various employees as per the terms of Satin ESOP 2009 on 02rd December, 2013 out of which 29,090 Options were vested and 25,824 were exercised on 2nd December, 2014. The exercised shares are in lock in period of one year from the date of transfer of shares from Satin Employees Welfare Trust to employees.

INFORMATIONREQU1RED TO BE D I S C L O S E D UNDER SEBI (ESOS & ESPS) GUIDELINES, 1999

Initially, the Company had issued 4,25,000 Equity Shares of Rs. 10'– each at a Premium of Rs.10/– per share to Satin Employees Welfaie Tiuit undo Saliii ESOP 2009 uu 27tli Nuvcuibci, 2009 for holding shaica ou bclulf of die Employees, and to Uaiisfci the said shares to the eligible employees upon exercise of options.

The Company has rather, allotted below–mentioned equity shares

a) 1.00,000 equity shares of Rs. 10/– each at a premium of Rs. 12J– each to Satin Employees Welfare Trust under Satin ESOP 2010 schcmc on 22 nd June, 2010.

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

POLICIES

Vigil Mechanism/Whistle Blower Policy:

The Company has established a vigil mechanism policy vide incorporating and adopting a Whistle Blower Policy for directors & employees pursuant to the requirement under section 177(9) of Companies Act, 2013 read with Rule 7 of Companies (Meeting of Board & its Powers) Rules, 2014 and Clause 49 of Equity Listing Agreement in its Board Meeting dated 09°Fcbruary, 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 mcchanism is communicated to all the directors and employees and is also disclosed on the website of the Company www.satincredltcarc.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 o f t h e Companies Act, 2013 and the listing agreement as amended from time to time and Rulcs/ Rcgulations/ Guidclincs/Notifications issued by Securities and Exchange Board of India (SEBI) from time to time, the policy on nomination and remuneration of Directors, Key

Managerial Personnel and Senior Management which includes within it a policy for having a Diversified Board and Familiarization programmed for Independent Director has been formulated and approved by the Board of Directors vide its meeting dated

09" February, 2015. This policy shall act as a guideline for determining, inter–alia, qualifications, positive attributes and independence of a Director, diversification of the Board, matters relating to the remuneration, appointment, removal and evaluation of performance of the Directors, Key Managerial Personnel, Senior Management and other employees of the Company. The Company shall familiarize the independent directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmers. The details of such familiarisation programmes is posted on the Company's website idc we blink http://www.satjncreditcare.com/pdf/rsominatjnuand– Remuneratlon–Policy.pdf.

Corporate Social Responsibility Policy:

Corporate Social Responsibility (hereinafter refined to as 'CSR') is a buzz word now a days for corporate. Even your Company has recognized its importance quite early therefore it has vide resolution passed h its Board Meeting dated 26° May. 2014 has constituted the Corporate Soeial Responsibility Committee. Further, Corporate Social Responsibility Committee in its meeting dated 09° February, 2015 has framed Corporate Social Responsibility Policy (hereinafter refened to as "Policy") pursuant to the requirement of Section 135( 1) 4 (3) of the Companies Act, 2013 along with The Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from :ime to time. In the aforesaid backdrop, policy on Corporate Social Responsibility of the Company is broadly framed taking into account the welfare measures for the community at large, so as to ensure the poorer section of the society deriving the maximum benefits. It also aims to contribution to the society at large by way of social and cultural development, imparting education, training and social awareness especially with regard to the economically backward class for their development and generation of income to avoid any liability of employment.

Risk Management Policy:

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

Related Party Transaction Policy:

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

All Related Party Transactions shall require approval of Audit Committee and said Committee will review and may amend this policy from time to time. The policy on Related Party Transaction is pested on website of the Company and we blink of the Company is wwrw.satincreditcare.com/pdf/Related–Partv–Transation–Policv.pdf.

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

Your Company is committed to ensure fair environment for its executives, staff and workers. In compliance of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressed) Act, 2013, the Company has adopted Sexual Harassment Policy approved vide Board of Director's meeting held on 0*>*February, 2015 which ensures a free and fair enquiry process with clear timelines. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressed) Act, 2013

MANAGEMENT DISCUSSION AND ANALYSIS

Resources and liquidity

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

The Company is in the process of taking the necessary approval to close the transaction. Credit Analysis and Research Limited (CARE) has reaffirmed the Long Teim Facilities Rating of SCNL of CARE BBB+ (Triple B Plus) aggregating Rs. 1,300 Crorcs.

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

Industry Scenario

In 2010–11, India's microfinance market was facing difficult time but today, :t can be said that the microfinance sector in the India has emerged from this crisis stronger than before. The Industry has matured with stronger institutions, the credit bureaus arc functional, the investors and lenders are back in business, there is greater focus of the government on financial inclusion with launch of Micro Units Development and Refinance Agency (Mudra) Bank, greater regulatory clarity, RBI considering giving new licensee for Small and Payment: banks etc. In view of the above, there are better days ahead for Indian Microfinance industry.

Business Review

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

Opportunities

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

Challenges

While the regulatory environment has improved the stakeholder's confidence still continue to be exposed to inherent risks in business model. Given that the microfinance borrowers belong to low income segment, customers are more prone to default. Moreover, with MFI operations concentrated in specific geographies, geographic concentration risks persist, these risks include natural disasters, social unrests, or political upheavals. The Reserve Bank of India has issued a series of circulars, directions and notifications to give the required regulatory clarity. Also the MFI industry has also collectively worked to bring back the stakeholders' confidence by working responsibly. The Company has a strong and experienced Board having multiple personalities having experience in different areas. The Company's senior management team has expertise in their respective field and the Company has geographical advantage, time tested system} 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 thj Company to achieve the performance better than its competitors.  

Outlook

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

Risk & Concerns

The Company is exposed to financial, operational and political risks. Because an MFI"s loan portfolio is its most valuable asset, the financial risks i.e. credit, market and liquidity arc of greatest conem.

Financial risks begin with the possibility that a borrower may no: pay the loan on time with interest (credit risk). They include the possibility that the MFI might lose a significant part of the due of its loan portfolio as a result of an economic downturn, hyperinflation, and other externally generated causes (market nsk). Financial risk can also include changes in interest rates of government lending programs or the possible enforcement of laws. Market risks include lower prices for borrowers' products and services, which could directly affect their ability or willingness to repay an outstanding loan. MFIs should be particularly aware of liquidity risk the lack or shortage of funds for current and future expenses or oans. Liquidity risk can result from an overly aggressive lending strategy, low levels of on–time payment and seasonal variant ions of demand or unanticipated expenses.

To prepare for these risks, Company usually hold in reserve certain percent of assets in cash and in short–term assets. The Company maintain reserves and provisions in its financials for meeting expected or unexpected future contingencies. The Company follows a couscivativc filiaucial appioacli by following pi udcut business and i isk maiugcnicnl p i a c t i t c s .

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, reported and monitored correctly. For the purpose of correctness and accuracy the proccss of job rotation is followed in different departments. The Company has adequate working infrastructure having computerization in all its operations including accounts and MIS.

The Company has established an Audit Committee to review and strengthen the adequacy of internal control. The internal auditors of the Company concoct 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 w.th expertise in different areas leading the growth of Company towards better operational and financial position.

The number o f employee* as at 31st March, 2015 stood a t 1788 (Previous Yeu–1243).

The Reserve Bank of India in exoreic 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 a resolution that the Company will not accept public deposit during 2015–16.

RESERVE BANK OF INDIA–REGISTRATION AND DIRECTIONS

Your Company has been following all relevant guidelines issued by Reserve Bank of India from time to time. The Company has decided not to accept the public deposits with effect from 20" November, 2004. The Company had intimated the same to Reserve Bank of India. Further, your Company has Capital Adequacy Ratio of 15.67% as on 31" March. 2015. The Reserve Bank of India on 27° November, 2014 issued Guidelines for Licensing of Small Finance Banks in the Private Sector. The object of Small Finance Banks shall be to primarily undertake basic banking activities of acceptance of deposits and lending to unserved and undeserved sections including small business units, small and marginal farmers, micro and small industries and unorganized sector entities by provision of savings vehicles. There will not be any restriction in the area of cperations of small finance banks. The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). In pursuance to aforesaid guidelines the Company on 24° January. 20.5 has applied with Reserve Bank of India for a License to jperate as 'Small Finance Bank'.

CORPORATE GOVERNANCE

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

leverage of prospective customers and their repayment track record. Additionally, the Microfinance Institutions Network (MFIN) has prescribed a code of conduct that provides guidelines for MFI operations and greater uniformity in their functioning.

Risk & Concerns

The Company is exposed to financial, operational and political risks. Because an MFI"s loan portfolio is its most valuable asset, the financial risks i.e. credit, market and liquidity arc of greatest conccm.

Financial risks begin with the possibility that a borrower may no: pay the loan on time with interest (credit risk). They include the possibility that the MFI might lose a significant part of the vdue of its loan portfolio as a result of an economic downturn, hyperinflation, and other externally generated causes (market nsk). Financial risk can also include changes in interest rates of government lending programs or the possible enforcement of laws. Market risks include lower prices for borrowers' products and services, which could directly affect their ability or willingness to repay an outstanding loan. MFIs should be particularly aware of liquidity risk the lack or shortage of funds for current and future expenses or owns. Liquidity risk can result from an overly aggressive lending strategy, low levels of on–time payment and seasonal variat ions of demand or unanticipated expenses.

To prepare for these risks, Company usually hold in reserve certain percent of assets in cash and in short–term assets. The Company maintain reserves and provisions in its financials for meeting expectcd or unexpected future contingencies. The Company follows a cousci vati vc filiaucial appioacli by following pi udcut business and iisk maiugcnicnl piactitcs .

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 authorized, recorded, reported and monitored correctly. For the purpose of correctness and accuracy the process of job rotation is followed in different departments. The Company has adequate working infrastructure having computerization in all its operations including accounts and MIS.

The Company has established an Audit Committee to review and strengthen the adequacy of internal control. The internal auditors of the Company concoct 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 w.th expertise in different areas leading the growth of Company towards better operational and financial position.

The number o f employee* as at 31st March, 2015 stood a t 1788 (Previous Yeu–1243).  

DEPOSITS

The Reserve Bank of India in exereisc 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 a resolution that the Company will not accept public deposit during 2015–16.

RESERVE BANK OF INDIA–REGISTRATION AND DIRECTIONS

Your Company has been following all relevant guidelines issued by Reserve Bank of India from time to time. The Company has decided not to accept the public deposits with effect from 20" November, 2004. The Company had intimated the same to Reserve Bank of India. Further, your Company has Capital Adequacy Ratio of 15.67% as on 31" March. 2015. The Reserve Bank of India on 27° November, 2014 issued Guidelines for Licensing of Small Finance Banks in the Private Sector. The object of Small Finance

Banks shall be to primarily undertake basic banking activities of acceptance of deposits and lending to unnerved and undeserved sections including small business units, small and marginal farmers, micro and small industries and unorganized sector entities by provision of savings vehicles. There will not be any restriction in the area of operations of small finance banks. The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). In pursuance to aforesaid guidelines the Company on 24° January. 20.5 has applied with Reserve Bank of India for a License to jperate as 'Small Finance Bank'.

CORPORATE GOVERNANCE

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

PARTICULARS OF EMPLOYEES

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

LISTING WITH STOCK EXCHANGES

Equity Shares of your Company were listed on Delhi Stock Exchange Limited, Ludhiana Stock Exchange Limited and Jaipur Stock Exchange Limited Securities and Exchange Board of India (SEBI) has derccogniscd all the three exchanges during the financial year 2014–15. The Board of Directors of the Company vide its meeting held on 26" May, 2014 approved the proposal of filing of application with BSE Limited in the interest of all stakeholders of the Company and filed the application on 3(r May, 2014.The application is still pending. Further, in order to protect the interests of Shareholders and allotment of further shares, the Board of Directors of the Company has on 30" March. 2015, approved the decision of applying for listing of the equity shares of the Company with the Calcutta Stock Exchange Limited. The Company has also applied for listing of equity shares of the Company with National Stock Exchange of India Limited. The Non–Convertible Debentures issued by the Company are listed on BSE Limited. Your Company ha* no dues pending with the above said Stock Exchanges.

EXTRACT OF ANNUAL RETURN

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

OTHER INFORMATION

Information pursumt to section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3XA)(B) of the Companies Accounts), Rules,2014

Particulars on Conservation of Energy, Technology Absorption

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

ACKNOWLEDGEMENTS

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

For and on behalf of the Board of Directors

Place: Delhi  

(H P Singh)

Dated: 25th May, 2015 Chairman cum Managing Director

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