You are here » Home » Companies » Company Overview » Satin Creditcare Network Ltd

Satin Creditcare Network Ltd.

BSE: 539404 Sector: Financials
NSE: SATIN ISIN Code: INE836B01017
BSE 00:00 | 22 Feb 240.85 11.85






NSE 00:00 | 22 Feb 242.25 13.10






OPEN 230.00
52-Week high 458.00
52-Week low 183.00
P/E 6.33
Mkt Cap.(Rs cr) 1,178
Buy Price 240.85
Buy Qty 142.00
Sell Price 241.90
Sell Qty 158.00
OPEN 230.00
CLOSE 229.00
52-Week high 458.00
52-Week low 183.00
P/E 6.33
Mkt Cap.(Rs cr) 1,178
Buy Price 240.85
Buy Qty 142.00
Sell Price 241.90
Sell Qty 158.00

Satin Creditcare Network Ltd. (SATIN) - Director Report

Company director report

Dear Members

The Directors are pleased to present the Twenty Eighth Annual Report along with theAudited Financial Statement of your Company for Fiscal 2017-18.





March 2018 March 2017 March 2018 March 2017
Revenue 976.64 776.67 1031.42 801.47
Total Expenses 958.98 733.84 1023.86 757.60
Profit before Depreciation and tax 17.66 42.83 7.57 43.86
Depreciation and amortization expenses 14.06 5.63 14.74 6.05
Profit Before Tax 3.60 37.20 (7.18) 37.81
Tax expenses (0.43) 12.70 (3.74) 12.89
(Loss)/Profit after Tax 4.03 24.50 (3.43) 24.92
Less: Share of minority interest - - (0.74) 0.05
Net (Loss)/Profit for the year 4.03 24.50 (2.69) 24.87
Brought forward from Previous Year 109.59 89.99 109.96 89.99
Profit available for appropriation 113.62 114.49 107.27 114.86
Transfer to Statutory Reserve Fund 0.81 4.90 0.81 4.90
Dividend Paid-Preference Share Capital 2.44 - 2.44 -
Dividend Distribution Tax 0.50 - 0.50 -
Surplus carried to Balance Sheet 109.87 109.59 103.52 109.96


During the financial years your Company has done well on all parameters. Your Companyhas undertaken initiatives with an objective to enhance customer reach improve operatingefficiencies reduce operating cost by implementing cashless system/digitization in 33Regional Offices and 414 Branches and has disbursed more than Rs. 1070 Crore throughcashless mode as of March 31 2018 which has enhanced the level of reporting systemimproving internal control ensure transparency promptness and fairness in disclosure. Toachieve better efficiency at operating level your Company has also entered into BusinessCorrespondent Agreement for Microfinance business verticle with a leading commercial bankand has started the pilot launch from Siliguri Regional Office in state of West Bengal.Furtherance to this to achieve optimum utilization of resources available Company hasalso entered into Business tie-up agreement(s) (BTA) with a large NBFC to act as serviceprovider to offer non Microfinance Financial products to Company's existing as well aspotential customer segments in terms of the BTA and started pilot for disbursement of twowheeler loans from Jodhpur region in state of Rajasthan.

Operational Highlights in brief (Standalone basis):

- The aggregate gross loan portfolio (GLP) of the Company stood at Rs 5084.80 Crore ason March 31 2018. This represents a year on year (YoY) growth of40.59 % as compared toMarch 312017.

- Loan amount of Rs. 5571.66 Crore was disbursed in FY 17-18 representing an increaseof 55.02 % as compared to FY 16-17.

- The Company disbursed Rs.18.16 Lakh loans during FY 17-18 an increase of 15.96% overFY 16- 17.

- Average loan amount disbursed per account during FY 17-18 was Rs. 30675 an increaseof 33.69 % from FY 16-17.

- The Company now cover 18 states/union territories.

Particulars March 31 2018 March 31 2017
Number of branches 809 618
Number of active loan 2401701 2298095
Total Assets under management including securitized and assigned portfolio (Net of Provision) (Rs. in Crore) 4989.73 3555.98

Fund raise during FY 2017-18:

In view of expanding business operations and to meet the capital requirements theCompany has raised equity capital by way of a preferential allotment of 1543187 equityshares of Rs. 10 each from "Asian Development Bank" (ADB) an entity belongingunder non-promoter entity at an issue price of Rs. 416.67 per shares on April 21 2017 interms of the Investment Agreement executed on April 10 2017 and simultaneously issued andallotted 658690 Fully Convertible Warrants to an entity under Promoter Category at anaggregate amount of approx. Rs. 30 Crore at an issue price of Rs. 455.45 per warrant whichwas subsequently converted into equivalent number of equity shares on June 30 2017.

The Company has issued and allotted 1230098 [0.01% Optionally Convertible RedeemablePreference Shares ("OCRPS") of Rs. 10 each] to "Capital FirstLimited" an entity belonging under non-promoter entity at an issue price of Rs.284.53 on August 10 2017 in terms of Investment Agreement executed on July 08 2017.

Further Company has also raised approx. Rs. 150 Crore by way of a QualifiedInstitutional Placement (QIP) and allotted 4918032 equity shares of Rs.10 each toQualified Institutional buyers (QIBs) at an issue price of Rs. 305 per equity share onOctober 11 2017 under the provisions of Chapter VIII of the SEBI (Issue of Capital andDisclosure Requirements) Regulations 2009 and section 42 & 62 of the Companies Act2013 including the rules made thereunder.

During third quarter your Company has successfully completed third round of equityraise by way of a preferential allotment of 2985073 equity shares of Rs. 10 each to"Kora Investments I LLC" and "Nordic Microfinance Initiative Fund III KS(formerly known as NMI Fund III KS)" (entities under non-Promoter Category) anentities belonging under non-promoter entity at an issue price of Rs. 335 per share onDecember 28 2017 in terms of Investment Agreements entered on December 19 2017 andsimultaneously issued and allotted 1791044 Fully Convertible Warrants(FCW) to an entityunder Promoter Category at an aggregate amount of approx. Rs. 60 Crore at an issue priceof Rs. 335 per warrant. The Company has also issued and allotted 1343283 [0.01%Optionally Convertible Cumulative Redeemable Preference Shares ("OCCRPS")] onpreferential basis to "IndusInd Bank Limited" (IBL) an entity belonging undernon-promoter entity at an issue price of Rs. 335 per OCCRPS in terms of InvestmentAgreement executed on December 19 2017.

Your Company has continued to diversify the sources of funds and raised a sum of Rs.3888 crore by way of short-term loans long-term loans issue of Non-ConvertibleDebentures Securitization & Assignments and Commercial Paper which has helped theCompany to achieve its' business target for FY 2017-18. Out of overall borrowings Companyhas raised Rs. 2054 Crore by way of term loan and Rs. 1111 Crore by way of PTCtransactions and proportion of NCD in total borrowing is Rs. 473 Crore. The Companyalready has borrowing arrangement with large number of lenders and keep on diversifyingits lender base. Please refer the Management Discussion and Analysis Report formore information.

Company's Prospects Future Plans and Business Overview:

Financial year under review was an extraordinary year evidencing the impact of currencyshortage immediately after demonetization on the repayment of microfinance borrower.Though it has impacted the profitability for the year as a whole eventually your Companyhas emerged much stronger and performed satisfactory during the year under review.However the Company has increased its capital base and started working on cashless modeland achieved a milestone of disbursing Rs. 1070 Crore through cashless mode. MoreoverCompany has taken several new initiatives to embark on a profitable growth path indifficult time by writing off NPAs and showed a positive growth during last threequarters in the year under review. Further your directors are quite hopeful to achievenew milestones of achievement in years to come.

Please refer the Management Discussion and Analysis Report for more informationon your Company's Business Overview.


The Company has duly complied with the provision of section 186 of the Companies Act2013 and Rules made thereunder. Details on loans or investments are mentioned in financialstatements of this Annual Report. The Company has not given any guarantee on behalf of athird party.


The Company has documented its policies controls and procedures covering allfinancial and operating functions designed to provide a reasonable assurance with regardto reliability of financial reporting monitoring of operations protecting assets fromunauthorized use or losses compliances with regulations prevention and detection offraudulent activities etc. The Company has put in place an adequate internal controlsystem to safeguard all its assets and ensure operational excellence. The system alsometiculously records all transaction details and ensures regulatory compliance. TheCompany also has a team of internal auditors to conduct internal audit. The reports arereviewed by the Audit Committee of the Board. Wherever necessary internal control systemsare strengthened and corrective actions initiated. Please refer to the Section"Internal Control Systems and their Adequacy" in the Management Discussion andAnalysis section ofthis report.


There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e.March 31 2018 and the date of the Directors' Report. Pursuant to the Investment Agreementdated July 8 2017 entered into by Capital First Limited with the Company and itsPromoters we have received communication from Capital First Limited about theirwillingness to convert 1230098 Optionally Convertible Redeemable Preference Shares(OCRPS) issued at a price of Rs. 284.53 per OCRPS into equivalent number of equity sharesin terms of the aforesaid agreement.


During previous financial year 2016-17 Taraashna Services Limited (TSL) becamesubsidiary of your Company on acquisition of 87.83% equity stake in TSL. During FY2017-18 your Company has infused funds of Rs. 12 Crore approx. in two tranches andacquired additional 3.28% stake in TSL. As on March 312018 your Company holds 91.11%stake in tSL.

In order to move towards diversification and to tap new market segment your Companyhas incorporated a wholly owned subsidiary "Satin Housing Finance Limited"(SHFL) with Authorized Capital of Rs. 15 Crore and paid up Equity Share Capital of Rs.10Crore on April 17 2017. Further to meet regulatory and projected growth of SHFL Companyhas infused further equity of Rs. 5 Crore in two tranches. SHFL recently got License fromNational Housing Board on November 14 2017 to commence business and operations. As onMarch 312018 your Company holds 100% stake in SHFL.

Business highlights of Taraashna Services Limited:

Taraashna Services Limited ("TSL") is engaged in Business Correspondentactivity and during FY 2017-18 has achieved a gross turnover of Rs. 53.83 Crore againsttotal gross turnover of Rs 40.48 Crore during previous year showing a growth of 32.97%.Further TSL has incurred loss of Rs. 6.63 Crore. Primary reason for the loss is thecrystallization of the First Loss Default Guarantee paid/payable to various principalpartners amounting to Rs. 20.85 Crore. However TSL has earned the operational profitbefore credit cost and tax of Rs. 11.07 Crore Your Company is quite hopeful for TSL in theyear to come.

Business highlights of Satin Housing Finance Limited:

Satin Housing Finance Limited wholly owned subsidiary's net worth stood at Rs 14.49Crore for the period ended March 31 2018. As on March 31 2018 regulatory Capital toRisk Assets Ratio (CRAR) was 685.96% which is well above the regulatory

requirement of 12%. SHFL has sanctioned loans of Rs. 3.77 Crore and disbursed loans ofRs. 2.11 Crore which led to total income during the period ended March 31 2018 of Rs 0.69Crore indicates a positive sign towards growth in this segment. Your Company is quitepositive to do well in affordable housing finance segment.

Consolidated Financial Statements:

In accordance with section 129(3) of the Companies Act 2013 and regulation 34(2) ofSEBI (Listing Obligations and Disclosure Requirement) Regulations 2015 the ConsolidatedFinancial Statements of the Company including the financial details of all the subsidiarycompanies forms part of this Annual Report. The Consolidated financial statements havebeen prepared in accordance with the Indian Accounting Standards issued by the Instituteof Chartered Accountants of India.

Further a statement containing salient features of the financial statements of theCompany's subsidiaries in Form AOC-1 also form part of the Annual Report. Further Companyhas neither any Associates nor any Joint Ventures as on March 312018.


All the Directors have varied experience and specialized knowledge in various areas ofrelevance to the Company. The Board consists of directors appointed as per the provisionsof the Companies Act 2013.

Mr. Arthur Sletteberg (DIN: 07123647) who is liable to retire by rotation and beingeligible offers himself for re-appointment in the ensuing AGM. Further Nomination &Remuneration Committee and the Board of directors have recommended his reappointment forconsideration of the members. Brief resume of Mr. Arthur and his educational/professionalqualifications nature of his working experience achievements name(s) of the companiesin which he holds Directorships Memberships and Chairmanships in various Committees andhis relationship between directors inter-se are provided erstwhile in the Annual Report.

Mr. Richard Benjamin Butler (DIN: 06574786) Nominee director of MV Mauritius Limitedand Mr. Ramesh G Dharmaji (DIN- 01186341) Nominee Director of Small Industries DevelopmentBank of India have ceased to be Directors of the Company with effect from January 192018 and November 08 2017 respectively. The Board wishes to place on record theappreciation for the valuable contribution of Mr. Richard Benjamin Butler and Mr. RameshG. Dharmaji in the sustained growth of the Company during their tenure as Directors of theCompany.

The Board based on the recommendation of the Nomination & Remuneration Committeeappointed Mr. Sanjaya Gupta (DIN: 02939128) as Nominee director to represent "AsianDevelopment Bank" w.e.f. August 21 2017 and Mr. Daniel Simpson Jacobs (DIN:07858118) as Nominee director to represent "Kora Investments I LLC" w.e.f.January 08 2018 on the Board of the Company.

There were no change in the Key Managerial Personnel during the year under review.

During the year 6 (six) Board Meetings were held. These Board Meetings were held onMay 26 2017 July 08 2017 August 14 2017 November 132017 November 24 2017 andFebruary 14 2018.


The Companies Act 2013 and SEBI (Listing Obligation and Disclosures Requirement)Regulations 2015 stipulates the performance evaluation of the Directors includingChairperson Board and its Committees. Further SEBI vide its circular dated January 52017 issued a guidance note on Board Evaluation for listed companies. In view of the sameand in terms of Board approved Nomination and Remuneration policy the annual evaluationof directors of their own performance Board Committees and individual directors(including Independent Directors) based on criteria for the Directors and the Board aredone through separate structured questionnaires.

The performance of Board and its Committees individual Directors and Chairpersonswere found satisfactory.


Pursuant to section 149(6) and schedule IV of the Companies Act 2013 the Board hasindependent directors and there is an appropriate balance of skills experience andknowledge in the Board so as to enable the Board to discharge its functions and dutieseffectively. The independent directors have submitted a declaration that the independentdirectors meet with the criteria of independence as required under section 149(6) of theCompanies Act 2013.


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

1. That in the preparation of the annual accounts for the financial year ended March31 2018 the applicable accounting standards had been followed along with properexplanation relating to material departures;

2. That they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit and loss of the Company for that period;

3. That they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

4. That they have prepared the annual accounts for financial year ended March 312018on a going concern basis;

5. That the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively during the financial year ended March 312018; and

6. That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively during the financial year ended March 31 2018.


There is no material order passed by the regulators or courts or tribunals impactingthe going concern status and Company's operations in future.


During the financial year 2017-18 there is no materially significant related partytransaction with the Company's promoters directors the management or their relativeswhich may have potential conflict with the interest of the Company at large. The Companyhas also formulated a policy on dealing with the Related Party Transactions (including formaterial related party transactions) and necessary approval of the Audit Committee andBoard of Directors were taken wherever required in accordance with the Policy. The detailsof such policies for dealing with all related party transactions are disseminated on thewebsite of the Company

Particulars of Contracts or Arrangements with related parties referred to in section188(1) is given in Form AOC-2 as Annexure-I. Further details of Related PartyTransactions as required to be disclosed by Accounting Standard-18 on "Related PartyTransactions" specified under section 133 of the Companies Act 2013 read with rule 7of the Companies (Accounts) Rules 2014 are given in the Notes to the FinancialStatements.

Justification for entering into related party transactions:

Your Company has entered into affordable housing finance business through a whollyowned subsidiary that can be beneficial for the growth of the Company. In April 2017 theCompany has incorporated a wholly owned subsidiary in the name of Satin Housing FinanceLimited ("SHFL") with Authorized Capital of Rs. 15 Crore and paid up EquityShare Capital of Rs. 10 Crore with the objective of balancing the risk by diversificationinto secured lending. Further during the year under review your Company has infused moreequity into SHFL in tranches to meet the regulatory requirement to maintain CRAR and tofinance its disbursement targets. As on May 30 2018 SHFL's Authorized Share Capital andpaid up Equity Share Capital stood at Rs. 60 Crore and Rs. 14.96 Crore respectively.

In order to expand the business operations of Taraashna Services Limited (TSL) yourCompany has also invested approx. Rs. 12 crore in two tranches. Further the management ofTSL is of the view that to meet its budgeted plans the technological transformation isvery essential. In view of this TSL has planned to implement Loan Management System forits operations to reduce the operational and administrative cost. Hence your Company hasentered into a Technology Service Agreement with TSL.

Furtherance to this the remuneration paid to Mr. H P Singh Chairman cum ManagingDirector and the sitting fee payment to nonexecutive directors (other than Investor'snominee) for each Board/Committee meeting(s) attended are shown under Related partydisclosures segment under "Notes to the account" of Balance Sheet in terms ofAccounting Standard 18 issued by The Institute of Chartered Accountants of India.


Statutory Auditors & their Report:

M/s Walker Chandiok & Co LLP Chartered Accountants bearing Registration No.001076N/N500013 have been appointed on the recommendation of the Audit Committee and ofthe Board of Directors (in conformity with the provisions of sections 139 and 141 of theCompanies Act 2013 read with the Companies (Audit and Auditors) Rules 2014) (includesamendments thereto) as the Statutory Auditors of the Company for the period of 5 yearsfrom the conclusion of the twenty seventh AGM till the conclusion of the thirty secondAGM. They have confirmed their eligibility for FY 2018-19 under section 141 of theCompanies Act 2013 (includes amendments thereto) and the said appointment is inaccordance with the applicable provisions of the Act and rules framed thereunder.

During the year under review the Auditors had not reported any matter under section143 (12) of the Act therefore no details are required to be disclosed under section 134(3)(ca) of the Act. The Auditors' Report is unmodified and does not contain anyqualification reservation adverse remark or disclaimer.

The Board has placed on record its sincere appreciation for the services rendered byM/s Walker Chandiok & Co LLP as Statutory Auditors of the Company.

Secretarial Auditors & their Report:

In terms of section 204 of the Companies Act 2013 and rules framed thereunder and onthe recommendation of the Audit Committee the Board of Directors of the Company hadappointed M/s S. Behera & Co. Practicing Company Secretaries (ICSI PCS RegistrationNo. 5980) as the Secretarial Auditor of the Company for the financial year 2017-18.Secretarial audit report as provided by M/s S. Behera & Co. Company Secretaries isalso annexed to this Report in the prescribed Form MR-3 as Annexure-II. TheSecretarial Audit Report does not contain any qualification reservation adverse remarkor disclaimer.

Any member interested in hard copy of the Secretarial Audit Report may inspect the sameat 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 fortheir re-appointment and appointed them as Secretarial Auditor in Board meeting held onMay 30 2018 for the financial year 2018-19.

Reporting of Frauds by Auditors:

During the year under review the Statutory Auditors and the Secretarial Auditors havenot reported any instances of frauds committed in the Company by its Officers or Employeesto the Audit Committee under section 143(12) of the Companies Act 2013 details of whichneed to be mentioned in this Report.

However eighteen instances of misappropriation including embezzlement of cash by theemployees amounting to Rs.94 lakh were reported. Company has recovered Rs. 26 lakh andwritten off Rs. 65 lakh out of the said amount. Consequently Company has terminated theservices of such employees and also initiated legal action against such employees.


In accordance with regulation 18 of SEBI (LODR) Regulations 2015 and in accordancewith the provisions of section 177 of the Companies Act 2013 and as per other applicablelaws the Company has an Audit Committee. All members of the Committee are financiallyliterate. The Chairman of the Committee was present at the last Annual General Meeting toanswer the queries of the Members. The scope of the activities of the Audit Committee isas set out in SEBI (LODR) Regulations 2015 read with section 177 of the Companies Act2013 and other applicable laws are approved by Board of Directors of the Company. Thecomposition of the Audit committee and the details of meetings attended by the Directorsare provided in Corporate Governance Report section of this Annual Report.


Directors of your Company have recommended dividend of Rs.30251333.39 (excludingdividend distribution tax) on Preference shares as stated below:

S. No. Preference Shares Period of dividend Type of dividend Amount (in Rs.)*
1. 12.10% Rated Cumulative Non-Convertible and Compulsorily Redeemable Preference Shares April 01 2017 to March 312018 Final dividend 30250000.00
2. 0.01% Optionally Convertible Cumulative Redeemable Preference Shares December 28 2017 to March 312018 Final dividend 345.94
3. 0.01% Optionally Convertible Redeemable Preference Shares August 10 2017 to March 312018 Final dividend 788.61
4. 0.01% Optionally Convertible Redeemable Preference Shares April 01 2018 to till date of conversion (i.e. May 30 2018) Interim dividend 198.84
Total 302 51333.39

*Amount of dividend is excluding of dividend distribution tax

In order to undertake and carry on future plans it is necessary to conserve theresources. Your directors are of the opinion of retaining the profits for the year withinthe Company and thus have not recommended any dividend on equity shares for the yearended March 312018.


Your Company has a vision to drive 'holistic empowerment' of the community and carriesCSR initiatives through a trust(s) qualified to undertake CSR activities in accordancewith schedule VII of the Companies Act 2013 (includes amendments thereto). Sustainabilityand social responsibility are an integral element of corporate strategy of the Company. Incompliance with section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 the Company has established the Corporate SocialResponsibility Committee (CSR Committee) in the financial year 2014-15 and thecomposition function and details of meetings attended by the Committee Members areprovided in the Corporate Governance Report.

The Board adopted the CSR Policy formulated and recommended by the CSR Committee andthe same is available on the Company's website.

During the year under review your Company has spent approx. Rs.114.30 lakh on CSRprojects/programs. Your Company is in compliance with the statutory requirements in thisregard.

As per the requirement of rule 8(1) of The Companies (Corporate SocialResponsibilities) Rules 2014 the Annual Report on CSR is annexed as Annexure III tothis report and the same is posted on the website of the Company The Company has carried out the CSR initiatives through MaharajaAgrasen Charitable Hospital Trust (MAHCT) an eligible trust qualified to undertake CSRactivities in accordance with schedule VII of the Companies Act 2013 MAHCT is in processof establishment of Maharaja Agrasen Medical College Maharaja Agrasen Nursing InstituteMaharaja Agrasen Paramedical Institute and Maharaja Agrasen Management Institute. Themedical college will have a separate section for economically weaker section categorypatients wherein patients will be treated free of cost including provision of freemedicines and diet. This section will run through CSR funds.


To widen the participation of shareholders in Company's decisions pursuant toprovisions of section 108 of Companies Act 2013 read with rule 20 of The Companies(Management and Administration) Rules 2014 as amended and in terms of regulation 44 ofSEBI (Listing Obligations and Disclosures Requirements) Regulation 2015 the Company hasprovided e-voting facility to its members in respect of all members' resolutions to bepassed at General Meeting(s) of the Company. The Company is providing this facility toenable them to cast their votes electronically on all resolutions set forth in the Notice.The instruction(s) for e-voting for ensuing Annual General Meeting is also provided withnotice to members of this Annual Report. The Company has signed necessary agreements withNational Securities Depository Limited and Central Depository Services Limited tofacilitate e-voting for members approval in their general meetings or through postalballots.


To contribute towards greener environment the Company again proposes to send documentslike members meeting notice/other

notices audited financial statements boards' report auditors' report or any otherdocument to members in electronic form at the e-mail address provided by them and/oravailable to the Company by the Depositories. Members who have not yet registered theire-mail address (including those who wish to change their already registered e-mailaddress) may get the same registered/updated either with their depository participants orby writing to the Company.


In order to develop and implement a long term incentive program to attract motivateand retain the talent in a competitive environment the Company has formulated andimplemented "Employees Stock Option Schemes (ESOS Schemes)" which provides forgrant of equity shares of Satin Creditcare Network Limited to employees of the Company andit's subsidiaries. The scheme provide for grant of options to employees of the Company andit's subsidiaries that vest in a graded manner and that are to be exercised within aspecified period.

The Company had allotted 425000 equity shares to Satin Employees Welfare Trust at Rs.20 each (including premium of Rs. 10 each) on November 27 2009. The Company had furtherallotted 100000 shares to Satin Employees Welfare Trust at Rs. 22 each (includingpremium of Rs. 12 each) on June 22 2010. The Company had further allotted 150000 sharesto Satin Employees Welfare Trust at Rs. 25 each (including premium of Rs. 15 each) onApril 21 2011. These shares were allotted at a value which is over the fair market valueof these share at the time of allotment and thus no expense has been recognized. Asagainst 425000 Equity Shares issued to Satin Employees Welfare Trust under Satin ESOP2009 the Company granted 150000 Options to two employees of the Company as per theterms of Satin ESOP 2009 on January 12 2010. These entire options are vested andexercised as per terms set out under ESOP 2009. Further the Company granted 98300Options to various employees as per the terms of Satin ESOP 2009 on December 02 2013. Outof98300 shares granted 25824 were exercised on December 02 2014 and 22633 wereexercised on December 03 2015 and 27243 were exercised on December 03 2016. Furtherthe Company has granted 87900 Options Equity Shares to various employees as per the termsof Satin ESOP 2009 on December 02 2016. Out of 87900 shares granted 21100 wereexercised in between December 2 2017 to February 1 2018. The exercised sharestransferred in terms of ESOP Scheme 2009 are required to be lock in period of one yearfrom the date of transfer of shares from Satin Employees Welfare Trust to employees.Further as the Satin Employee Stock Options Scheme 2017 (Satin ESOS 2017) has come intooperations and all unvested options are transferred to the Satin ESOS 2017 from July 62017 Company has granted 145200 Options to various employees as per the terms of SatinESOS 2017 on August 14 2017.


The Board of Directors of your Company has approved an Employees' Stock Option Schemeduring the Year 2009 and 2010 in accordance with SEBI (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 (hereinafter referred to as "SEBIRegulations") with the objective of strengthening employee bond with the Company andcreating a sense of ownership. Your Board felt it appropriate to extend Employee StockOptions to permanent employees in the management staff including Managing Director andWhole-time Director(s) in order to motivate and retain the best talent. Further duringthe year the Company has amended the scheme as per the new regulations i.e. SEBI (ShareBased Employee Benefit) regulations 2014. On July 6 2017 Company came up with SatinEmployee Stock Option Scheme 2017 ("Satin ESOS 2017") which is drawn inaccordance with the Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 to create grant offer issue and allot from time to time in one ormore tranches options not exceeding 361400 representing 0.96% of the paid-up capital ofthe company as on March 31 2017 (or such other adjusted figure for any bonus stocksplits or consolidations or other reorganization of the capital structure of the Companyas may be applicable from time to time including the shares lying with the Trust that mayremain unutilized pursuant to non-exercisability of options granted under Satin ESOP 20092010 (I) and 2010 (II) to or for the benefit of permanent employees of the Company andits subsidiaries whether working in India or outside India; Directors of the Companywhether a Whole-time Director or not but not an Independent Director; and such otheremployees and persons as may be permitted under the applicable laws and as may be approvedby the Committee from time to time on such terms and conditions as contained in theScheme.

A. Disclosures in terms of the 'Guidance note on accounting for employee share-basedpayments' issued by ICAI or any

other relevant accounting standards.

1. The Company had 'nil' share-based payment arrangements during the year ended March312018.

2. The estimated fair value of each stock option granted in the general employee stockoption plan is Rs.420.75 and Rs.

166.98. This was calculated by applying Black Scholes pricing model. The model inputswere as follows:


Satin ESOP 2009


Share price at grant date (In Rs.)



Vesting First Second Third First Second Third
Exercise price (In Rs.) 20 20 20 160 160 160
Expected volatility (%) 60.39 60.39 60.39 55.86 62.90 62.90
Expected dividends yield - - - - - -
Contractual life (in years) - 0.70 1.70 0.40 1.40 2.40
Risk free interest rate 6.09% 6.04% 6.03% 6.35% 6.40% 6.45%

3. Other information regarding employee share-based payment plans is as below:

Particular Year ended March 31 2018 Year ended March 31 2017
Expense arising from employee share-based payment plans Rs. 18907983 Rs.5203662

B. Diluted EPS on issue of shares pursuant to all the schemes covered under theregulations shall be disclosed in accordance with 'Accounting Standard 20 - Earnings PerShare' issued by ICAI or any other relevant accounting standards as prescribed from timeto time: Rs. 0.25.

Effects of Share Options on Diluted Earnings per Share (Accounting year April 012017to March 31 2018):

Net profit for the year ended 2018 (in Rs.) 10837968
Weighted average number of equity shares outstanding during the year ended 2018 42166114 Shares
Average fair value of one equity share during the year ended 2018 420.75 & 166.98
Weighted average number of shares under option during the year ended 2018 405567 Shares
Weighted average number of shares under Conversion during the year ended 2018 1134552 Shares
Exercise price for shares under option during the year ended 2018 (in Rs.) 20 & 160

Computation of earnings per share:

Particulars Earnings Shares Earnings Per Share
Net profit for the year ended 2018 (Rs.) 10837968 - -
Weighted average number of shares outstanding during year ended 2018 - 42166114 -
Basic earnings per share (Rs.) - - 0.26
Number of shares under option - 405567 -
Number of shares under conversion - 1134552 -
Diluted earnings per share (Rs.) 10835395 43706233 0.25

C. Details related to ESOS

(i) A description of each ESOS that existed at any time during the year including thegeneral terms and conditions of each


S. No. Particular Satin ESOP 2009 (Remarks) Satin ESOP I 2010 (Remarks) Satin ESOP II 2010 (Remarks) Satin ESOS Scheme 2017
a) Date of shareholders' approval June 01 2009 March 26 2010 December 15 2010 July 6 2018
b) Total number of options approved under ESOS 425000 100000 150000 361400 and such other unvested options under existing ESOP Schemes
c) Vesting requirements/ Conditions The actual vesting of options will depend on continuation to hold the services being provided to the Company at the time of exercise of options and such other conditions as mentioned in the ESOP Scheme. The actual vesting of options will depend on continuation to hold the services being provided to the Company at the time of exercise of options and such other conditions as mentioned in the ESOP Scheme. The actual vesting of options will depend on continuation to hold the services being provided to the Company at the time of exercise of options and such other conditions as mentioned in the ESOP Scheme. The actual vesting of options will depend on continuation to hold the services being provided to the Company at the time of exercise of options and such other conditions as mentioned in the Satin ESOS 2017.
d) Exercise price or pricing formula Rs. 20/- being the Fair Value of the shares of the Company (Computed on the basis of Aaudited result FY 2008-09). Rs. 22/- being the Fair Value of the shares of the Company. (Computed on the basis of Audited result FY 2009-10) Rs. 25/- being the Fair Value of the shares of the Company. (Computed on the basis of Audited result FY 2009-10) Nomination and Remuneration Committee is free to determine the exercise price based on Market Price
e) Maximum term of options granted 3 Years 3 Years 3 Years 3 years or as the Committee may deem fit.
f) Source of shares (primary secondary or combination) Primary Primary Primary Primary
g) Variation in terms of options Not Applicable Not Applicable Not Applicable Variations in Terms of Grants can be done by the Nomination and Remuneration Committee

(ii) Method used to account for ESOS - Fair Value (Black Scholes Model).

(iii) Option movement during the year (For each ESOS):

Particulars Satin ESOP 2009 (Remarks) Satin ESOP I 2010 (Remarks) Satin ESOP II 2010 (Remarks) Satin ESOS Scheme 2017 (Remarks)*
Number of options outstanding at the beginning of the period 120700 100000 150000 361400#
Number of options granted during the year - - - 145200
Number of options forfeited / lapsed during the year 12900 - - 67800
Number of options vested during the year 22300 - - -
Number of options exercised during the year 21100 - - -
Number of shares arising as a result of exercise of options 21100 - - -
Money realized by exercise of options (INR/Rs.) if scheme is implemented directly by the company Rs. 422000 - - -
Loan repaid by the Trust during the year from exercise price received Rs. 422000 - - -
Number of options Shifted to the New ESOS Scheme 2017 133600 100000 150000 -
Number of options outstanding at the end of the year - - - 306200
Number of options exercisable at the end of the year 44600 - - 77400

• Figures of Outstanding Options under Satin ESOS 2017 are reported consideringfigures of Existing ESOP Scheme and Satin ESOS 2017

• 9300 options expired/lapsed under earlier ESOP Scheme in FY 2016-17 areadjusted.

(iv) Weighted-average exercise prices :

• when the exercise price is equal/exceeds to market price: NA

• when the exercise price is less than market price- Rs. 20 and Rs. 160

Weighted-average fair values

• when the exercise price is equal/exceeds to market price: NA

• when the exercise price is less than market price- Rs. 420.75 and Rs. 166.98.

(v) Employee wise details (name of employee designation number of options grantedduring the year exercise price)

(a) Senior managerial personnel

Details of Options Granted to Senior Managerial Personnel during this financial year
S. No. Name of Employee Designation Number of Option granted during the year Exercise Price (in Rs.) Company
1. Mr. Sanjay Mahajan Chief Information Officer 12000 160 Satin Creditcare Network Limited
2. Mr. Subir Roy Chowdhury Chief Human Resource Officer 12000 160 Satin Creditcare Network Limited
3. Mr. Dev Vrat Tiwari Head Legal 1200 160 Satin Creditcare Network Limited
4. Mr. Sanjeev Vij Chief Executive Officer 12000 160 Taraashna Services Limited
5. Mr. Punit Sharma AVP-Human Resource 3000 160 Taraashna Services Limited
6. Mr. Milind Govindrao Deshmukh Chief Operating Officer 4500 160 Taraashna Services Limited
7. Mr. Abhay Thakkar Chief Financial Officer 1200 160 Taraashna Services Limited
8. Mr. Kuldeep Singh Yadav Company Secretary 1200 160 Satin Housing Finance Limited

(b) Following employees has received a grant in the reporting year of option amountingto 5% or more of option granted during that year;

S. No. Name of Employee Designation No of Options granted
1. Mr. Sanjay Mahajan Chief Information Officer 12000
2. Mr. Subir Roy Chowdhury Chief Human Resource Officer 12000
3. Mr. Sanjeev Vij Chief Executive Officer 12000

(c) There is no Identified employees who were granted option during any one yearequal to or exceeding 1% of the issued capital (excluding outstanding warrants andconversions) of the company at the time of grant.

The details pursuant to SEBI (Share Based Employee Benefit) regulations 2014 has beenplaced on the website and web link of the same is


Vigil Mechanism/Whistle Blower Policy:

The Company has formulated a vigil mechanism through Whistle Blower Policy to deal withinstances of unethical behaviour actual or suspected fraud or violation of Company'scode of conduct or ethics policy and details of the same are explained in the CorporateGovernance Report. The Policy is also available on the Company's website.

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 invaluableassets to pay equitable remuneration to all

Directors Key Managerial Personnel (KMP) Senior Management and other employees of theCompany with objective to have diversified Board and to harmonize the aspirations of humanresources consistent with the goals of the Company and also in terms of section 178 of theCompanies Act 2013 and regulation 19 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 Nomination and RemunerationCommittee had approved 'policy on Nomination & Remuneration for Directors KeyManagerial Personnel (KMP) & Senior Management and Other Employees'. The aforesaidpolicy was approved by the Board of Directors vide its meeting dated February 10 2016.The Company shall periodically conduct familiarization programme for the independentdirectors their roles rights responsibilities nature of the industry in which theCompany operates and its business model etc. The detail of such familiarizationprogrammes is disclosed on the Company's website i.e.

Risk Management Policy:

The Board of Directors has adopted the Risk Management Policy based on therecommendation of the Risk Management Committee in order to assess monitor and managerisk throughout the Company. Risk is an integral part of any business and sound riskmanagement is critical for the success of any organization. The Audit Committee reviewsadequacy and effectiveness of the Company's internal control environment to monitor andmitigate the risk through internal audit recommendations including those relating tostrengthening of the Company's risk management policies and systems.

Sexual harassment policy for women under The Sexual Harassment of Women at workplace(prevention prohibition and Redressal) Act 2013:

Your Company has in place a formal policy for prevention of sexual harassment of itsemployees at workplace. The Company is in compliance with the Sexual Harassment of Womenat workplace (Prevention Prohibition and Redressal) Act 2013 and has adopted a revisedpolicy on Sexual Harassment on August 14 2017 to prohibit prevent or deter any acts ofsexual harassment at workplace and to provide the procedure for the redressal ofcomplaints pertaining to sexual harassment thereby providing a safe and healthy workenvironment.

Further during the year under review there was no case filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.



Your Company is the second largest microfinance institution (MFI) in terms of GrossLoan Portfolio (GLP) (source: MFIN: Micrometer March 2018). The Microfinance Industry hasplayed a vital role in promoting financial inclusion across the country. The wholemicrofinance industry was impacted by major reform towards the Indian economy on theaccount of demonetization. The relative slowdown in the growth of microfinance sector wasprimarily due to shortage of currency immediately after demonetization. Due tonon-availability of cash the business activity in rural areas decreased. Additionallydue to factors such as local activism misinterpretation of regulations and misplacedexpectations of loan waivers the collections dwindled forcing MFIs to show caution fromfurther lending. However during FY 2017-18 despite all these hurdles your company hasattained growth in all parameters. Demonetization had impacted the Company and wholeindustry negatively in the short run but the digital push opening of Jan Dhan Bankaccount has created future growth platform for MFIs.

With increase in the rural income and consequent decrease in the level of unemploymentloan collections getting back on track. Also the level of disbursement has substantiallygrown up and the result of this is visible in improved profitability from last threequarters.

Resources and liquidity:

After challenging Quarter 4 of FY 2016-17 and Quarter 1 of FY 2017-18 the overallenvironment has improved for funding in the Microfinance industry in India. During FY2017-18 the Company has (i) total income increased to Rs. 976.64 Crore from Rs. 776.67Crore a growth of 25.75% in current year as compared to previous year; (ii) profit aftertax decreased to Rs. 4.03 Crore from Rs. 24.50 Crore reflecting the decrease of 83.57% incurrent year as compared to previous year and (iii) net worth increased from Rs.. 662.22Crore to Rs. 1095.06 Crore a growth of 65.36% in current year as compared to previousyear. Your Company accomplishes its funding requirement through a diverse set of sourceswhich include loans from banks and financial institutions funding through issuance ofpreference shares non-convertible debentures and commercial papers etc. Your Companyaccomplishes its funding requirement through a diverse set of sources which include loansfrom banks and financial institutions funding through issuance of preference sharesnon-convertible debentures and commercial papers etc. During FY 2017-18 the Company hasraised debt of Rs 2777 Crore as against Rs 2937 Crore raised in FY 2016-17. The Companyhas also securitized some of its future receivables resulting in reduction in its debtservicing cost and raised Rs. 1111 Crore in FY 2017-18 against 795 Crore in FY 2016-17.Your Company's resource needs have also been supplemented by capital infusions and theCompany has raised aggregate Rs 439 Crore in several rounds of capital with the continuedsupport of its existing and new investors. Your Company's continued business growthliquidity and profitability will depend on its ability to obtain adequate funding onacceptable terms from relatively stable and cost-effective sources of funds which in turnimproves its financial performance capital adequacy level credit rating andrelationships with lenders and investor. Outlook of credit rating got revised fromNegative to Stable from CARE/ICRA/India Ratings.

Further the overall liquidity and funding position of the Company is comfortable. TheCompany has been regular in repayment to all its lenders and has excellent relationshipwith all the financial institutions and banks.

Nature of Business:

Your Company is the second largest microfinance institutions in terms of GLP with astrong presence in north east and central India. The business of the Company is primarilybased on the JLG Model for providing collateral free microcredit facilities toeconomically active women in both rural and semi-urban areas who otherwise have limitedaccess to mainstream financial service providers. The operations are spread across 18states and union territories in India including Uttar Pradesh Bihar Madhya PradeshPunjab Haryana Rajasthan Uttrakhand Maharashtra West Bengal Gujarat JharkhandDelhi & NCR Chhattisgarh Assam Orissa Himachal Pradesh Jammu & Kashmir andChandigarh with a focus on rural and semi-urban areas. A number of the regions in whichwe operate have moderate or low rate of penetration of micro finance institutions. YourCompany has adopted a client centric operations methodology that involves direct contactwith clients through group trainings and various meetings of group members with centerleader which occur at regular intervals. The Company's operations methodology alsoincludes various pre-defined criterion for area selection village selection and clientselection which we believe helps us mitigate and minimize our operational risks. It hasbeen our strategy to maximize our reach to financially excluded population which weintend to achieve with the support of our technology-enabled business model. As a part ofour effort to improve efficiency and reduce business risks we are moving towards cashlessdelivery model in partnership with various institutions.

Your Company has also offered loans to individual businesses including MSME productloans for financing solar lamps and for development of water connection and sanitationfacilities. During the year under review the Company has incorporated a wholly ownedhousing finance subsidiary named Satin Housing Finance Limited (SHFL) with a view toprovide financing in the affordable housing segment and leveraging rural outreach.Subsequently National Housing Bank has granted "Certificate of Registration (u/s 29Aof the National Housing Bank Act 1987) bearing Registration No. 11.0161.17 on November14 2017" to commence business as housing finance to SHFL. On receipt of licenseSHFL has started its loan disbursal and first loan was disbursed on February 07 2018 inDelhi/ NCR Region. Entry into the MSME and Housing Finance segments is in-line withcompany's strategy of product diversification as well as diversification from un-securedinto secured lending.

The Directors are quite hopeful to achieve a new milestone of achievement in the yearsto come.

Industry Scenario:

Rural India is heavily dependent on the informal sector and has witnessed a significanttransformation in recent years. With rising digital penetration across rural areas and theuptake of mobile phones and internet since 2005 have led to strong growth in digitalcommerce. There are around 50 Crore mobiles subscribers in rural India (as of June 2017)of which 11 crore users uses own smartphones. [source: Mobile headset penetration: Whyrural consumer is not rural anymore Financial Express] Digitization holds key benefitsfor MFIs including improved payment security reduced collection costs easy access toe-commerce and reduced paperwork. Further increased internet penetration could also leadto significant reduction in customer acquisition and marketing costs for MFIs. Further inBudget 2018 Government has increased focus on improving digital infrastructure in ruralareas which coupled with Jhan Dhan Account will help in financial inclusion. The improvedinternet and telecom infrastructure will help microfinance companies to acceleratecashless disbursal and collection resulting in better and cost effective delivery.

Further after demonetisation microfinance industry witnessed a sharp surge in thenon-performing assets (NPAs) since the sector dealt largely in cash. The loan repaymenttook a severe hit in the cash-based sector. To improve the situation Government has takendecision to review refinancing policy of MUDRA for better financing of NBFCs is a goodnews for NBFC-MFIs. MUDRA has been an important source of financing for microfinancecompanies and after this announcement MFI sector expects easier access of finance at lowerrates in the future through MUDRA and also introduced incentives for MSMEs in the form ofcapital support and corporate tax reduction to 25% for companies with turn over under Rs.250 crore through this move government encouraging small entrepreneurs in both urban andrural areas. Clubbed with increased target for MUDRA Yojana for this year encouragessmall and medium entrepreneurs to expand their businesses. [Source: Budget 2018]

Moreover Government of India through its digital India programme continues to investand drive various digital ecosystem of the Country. This move shall boost the microfinanceindustry as a whole.

Business Review:

Financial year under review was a challenging year for the Company. The repayments wereimpacted due to cash shortage resulting in higher NPA and lower profitability. The strongfield force of the Company supported by all other team members have worked hard to bringCompany back on growth path. The disbursement and collection has started improving and theprofitability is consistently improving for the last 3 quarters. In order to achieve its'growth target the Company has increased its capital base improved technology enhancedcashless disbursement focused on training of manpower and improved system and processesduring the year. To diversify business and for optimum utilization of resources; yourCompany has entered into a Business tie-up agreement with a large NBFC on July 08 2017 inrespect of a business sourcing and management relationship for nonmicrofinance loanproducts.

Furtherance to this for sustained funding for microfinance business Company has alsoentered into a Business Correspondent Agreement with a leading commercial bank on February07 2018. In over 27 years of operation your Company has developed partnerships with overlarge number of public sector banks private sector banks foreign banks and otherdomestic and overseas financial institutions. During the year under review the Companyhas been availing various credit facilities from Banks domestic and international lendersand from institutions for its microfinance operation which is the main activity of theCompany.

To strengthen the capital need of the expanding business operations and to augmentcapital base to meet Capital Adequacy ratio your Company has raised equity capital by wayof preferential allotment of equity shares from "Asian Development Bank" (ADB)for an aggregate amount of approx. Rs. 65 Crore and simultaneously issued and allottedFully Convertible Warrants to an entity in the Promoter Category for an aggregate amountof approx. Rs. 30 Crore which was subsequently converted into equivalent number of equityshares. Company has allotted 0.01% Optionally Convertible Redeemable Preference Shares to"Capital First Limited" for an aggregate amount of approx. Rs. 35 Crore.Further Company has also raised approx. Rs. 150 Crore by way of Qualified Institutionalplacement.

The Company has successfully raised equity capital by way of preferential allotment to"Kora Investment I LLC" and "Nordic Microfinance Initiative Fund IIIKS" for an aggregate amount of approx. Rs. 100 Crore and simultaneously allottedfully convertible warrants to an entity in the Promoter Category for an aggregate amountof approx. Rs. 60 Crore (out of which 25% was received by the Company rest 75% shall bereceivable at the time of conversion of warrants into equity). Further the Company hasallotted 0.01% Optionally Convertible Redeemable Preference Shares to "IndusInd BankLimited" for an aggregate amount of approx. Rs. 45 Crore.

The rating agency CARE ratings assigned grading of 'MFI 1' (MFI One) to the Company.Grading is assigned on an eight-point scale with MFI1 (MFI one) being the highest and MFI5being the lowest.

Our Client Protection Practices and customer grievance redressal mechanism are alignedwith industry COCA standards for which the Company have received the rating C2 from ICRALimited. Assessment on Code of Conduct was done on the indicators pertaining toTransparency Client Protection Governance Recruitment Client Education Feedback &Grievance Redressal and Data Sharing. SCNL's code of conduct grading takes into accountthe company's transparent communication mechanism robust client protection norms and itscompliance with best practices related to Governance Recruitment Client Education andData Sharing.

The Company has an experienced and stable management team and Board of Directors. TheCompany is hopeful of performing well during the current year.

Scenario post demonetization:

By the end of third quarter of the financial year under review the positive outcome ofdemonetization was felt by whole MFIs sector towards digitization's that leads to upgradethe Information Technology systems (IT System) to better understand their customers andaccelerate their customer acquisition and loan disbursement process using Core BankingSolutions (CBS). Regulators also focussing on digitization to improve the efficiency andfinancial inclusion in the economy. In view of the same Reserve Bank of India has alsocome up with the various regulatory reforms to monitor IT system of the NBFCs.

Your Company has also developed cashless model for collection & disbursement inpartnership with various agencies which opens the door towards new horizon in thisbusiness segment.


Microfinance industry has already proved its viability as a business model as well asits ability to reach out to a significant section of the population which needsmainstreaming. It will continue to remain a relevant and important conduit for providingfinancial services to a vast segment of the population acting in complementarity tobanks. However given the inherent vulnerability of the customer base it is important toplan for current and future risks that can impact repayments and slow down the access toregulate credit lines for the underserved. Technology has penetrated into rural Indiathrough the surge in usage of smartphones. Increasing use of technology to reach ruralIndia is a paradigm-shifting enabler. Internet kiosk based channels are expected to becomethe bridge that connects rural India to the financial services sector. As rural India getsconnected to the outside world consumer awareness on formal channels of financing willincrease thus providing a platform for rural focused companies to chart new growthregions. Currently Company can see lot of potentials for growth in various regions whichare still untapped and where there is substantial need demand and opportunity formicrofinance also affordable housing finance and MSME finance. We intend to expand ourreach and operations in the states where we are currently present and new states byestablishing new offices both by increasing business transacted through existingbranches and by establishing new branches across the north central and eastern regionsof India. Our primary objective is to have diversified presence across geographies inIndia with significant growth opportunities through various business verticals of theCompany which will allow us to maintain stable and sustainable growth of our business andmitigate political and state-specific risks. In addition our focused expansion in regionswith limited availability of financial services will enhance financial inclusion and havea positive social impact thereby creating goodwill for your Company which we believewill further enhance the growth. We will continue to evaluate opportunities for alliancescollaborations and partnerships that meet our strategic and financial return criteriaand to strengthen our portfolio.

The Indian MSME sector is open for new participants to enter in this segment as rapidgrowth promises positive outlook. Timely policy decisions in the sector and due supportfrom stakeholders which have resulted in rendering the Indian MSMEs globally viable.

Further as a business correspondent Company Taraashna Services Limited (subsidiary ofSatin Creditcare Network Limited) seeks to enter into arrangements with various otherbanks and financial institutions to scale the business correspondent and allied servicesbusiness across multiple product and geographies. TSL believes there is significantbusiness opportunity and regulatory push in this area with the Reserve Bank of India andgovernment actively supporting the financial inclusion business and facilitating thegrowth of MSME sector (through small bank loans and dairy loans) in the economy throughmeeting their financial requirement. TSL is building innovative process in place foroperations and Information Technology along with very strong corporate governance systemsand best ethical practices codes in place to conduct its business operations. TSL willcontinue to follow the best client centric policies and approach.

As per the research conducted affordable housing finance segments is likely to grow toRs. 600000 Crore in the next four years from Rs. 150000 Crore now. This will makehousing segment a major contributor to the overall housing finance activity. Theaccelerated urbanization on account of fast economic growth over the last decade- and-a -half has created massive need for affordable housing. Hence Company has floated a whollyowned subsidiary (Satin Housing Finance Limited "SHFL") to tap housing financesector. The financial year 2018-19 is going to be a year in which SHFL will use technologyand digitisation for excellence in business. SHFL will implement robust systems one ofthe best state of art software and excellent technological framework for paperlessenvironment and customer experience. SHFL plans to build innovative process in place forcredit operations and information technology along with very strong corporate governancesystems and best ethical practices codes in place to conduct its business operations. SHFLowns very diversified and unique business approach catering to middle and low incomecustomers of Urban and Rural areas for their varied housing finance needs. SHFL has signedthe MOU with the National Housing Bank for the credit linked subsidy scheme and mortgageguarantee schemes and is also looking forward to participate actively in the PradhanMantra Awas Yojna (PMAY). SHFL will focus on the much talked about affordable housingsector and housing for all schemes to promote the government vision of facilitating homeloan finances at reasonable rates and housing for all vision till 2022.

Overall in the year to come your Company can see more opportunities and new horizonsto tap new markets untapped regions to diversify loan portfolios.


There are several challenges for microfinance sector in India that are limiting thegrowth of MFIs in terms of reach and disbursement. Further as industry is looking formore partners in coming time talent acquisition and retention is also one of the majorchallenges for MFIs industry as this industry has to compete with Banks & other NBFCsalso. While the target customers of MFIs are predominantly woman hiring woman has been achallenge due to travelling requirements of the Job. MFIs incur high operational costsespecially for searching and collecting information during loan origination and duringmonitoring and collections which limits their ability to maximize the outreach. The smallloan sizes and short tenure further intensify the challenge. Further post demonetizationdelinquency rate have also increased due to cash- shortage. Further to compete with BanksMFIs facing challenge to raise capital and manage credit risks. Somehow in recent yearscompetition for MFIs sector from Banks and NBFCs have increased in terms of lending rateas MFIs cannot accepts deposits leads to higher cost of funds additionally policybarriers such as capping of margin at 10 percent affects the profitability.


The overall outlook for the Microfinance Industry has been improving cost of fundsseems declining that leads to positive outlook towards Microfinance Industry. With variousschemes launched by Government for financial inclusion there is greater opportunities inmicrofinance sectors in the years to come. The focus of government on digital transactionwill help in bringing down the operating and administrative cost and in long rundigitalisation in transaction will bring transparency and good governance in financialsystem. Your Company has implemented Loan Management System in the year under review andworking towards robust systems and excellent technological framework for paperlessenvironment and customer experience. It will reduce the operational risk and increase theoutreach of customer.

Risk & Concerns:

Our microfinance loans are unsecured and therefore exposed to operational and creditrisks along with financial operational and political risks. Furthermore our Company hasexposed to following types of risks that evolved with this Microfinance industry.

- Failure to comply with financial and other covenants under our loan agreements maymaterially and adversely affect our financial condition results of operations cash flowsand business prospects.

- Financial performance is exposed to interest rate risk and an inability to manageour interest rate expenses may have a material adverse effect on our business prospectsand result of operations.

- Operations involve handling cash in high volumes through a dispersed network ofbranches which makes us susceptible to operational risks.

- The sector in which we operate is highly regulated. Regulations governing us may infuture become more stringent and onerous and the changes introduced may adversely affectour business prospects and financial performance.

- Any downgrade of our credit ratings may increase our borrowing costs and constrainour access to capital and loan markets and as a result may adversely affect our netinterest margin and our results of operations.

- Taraashna Services Limited ("TSL) is dependent on banks and other financialinstitutions for its business and receives commission In the event that banks and otherfinancial institutions do not outsource business correspondence and other services forany reason or do not pay adequate commission to TSL our business and financial conditionmay be adversely affected.

Further few risk are beyond the control of Company which may adversely affect thebusiness:

- changes in exchange rates and controls.

- macroeconomic factors and central bank regulation including in relation to interestrates movements which may in turn adversely impact our access to capital and increase ourborrowing costs.

- any downgrading of India's debt rating by an international agency.

- political instability resulting from a change in government or in economic andfiscal policies.

- social and civil unrest acts of violence terrorist attacks regional conflicts orsituations or war may adversely affect the financial markets.

- changes in government policies including taxation policies and other politicalsocial and economic developments in or affecting India. or

- natural calamities and force majeure events.

To prepare for these risks Company usually hold in reserve certain percent of assetsin cash and in short-term assets. The Company maintain reserves and provisions in itsfinancials for meeting expected or unexpected future contingencies. The Company follows aconservative financial approach by following prudent business and risk managementpractices. Further Company has sufficient caution in the system/ process to mitigate theadverse effect of the risk.

Adequacy of internal controls:

The Company has proper and adequate internal control systems to ensure that allactivities are monitored and controlled against any unauthorised use or disposition ofassets misappropriation of funds and to ensure that all the transactions are authorisedrecorded reported and monitored correctly. For the purpose of correctness and accuracythe process of job rotation is followed in different departments. The Company has adequateworking infrastructure having computerization in all its operations including accounts andMIS.

Company's Internal Audit department has an annual audit plan based on the risk profileof business activities of the organization. The Internal Auditors of the Company conductaudit of various departments based on an annual audit plan covering key area of operationsand reviews and evaluates the adequacy and effectiveness of internal controls ensuringadherence to operating guidelines and systems and recommending improvements forstrengthening them. The company has documented its policies controls and procedurescovering all financial and operating functions designed to provide a reasonable assurancewith regard to reliability of financial reporting monitoring of operations protectingassets from unauthorized use or losses compliances with regulations prevention anddetection of fraudulent activities etc. The Company has continued its efforts to align allits processes

and controls with leading practices. The Audit Committee of the Board of Directorscomprising of independent directors periodically reviews the internal audit reportscovering findings adequacy of internal controls compliances applicable on the Company.The Audit Committee also meet the Company's Statutory Auditors to ascertain their views onthe financial statements including the financial reporting system compliance toaccounting policies and procedures the adequacy and effectiveness of the internal controland systems followed by the Company. The Management acted upon the observations andsuggestions of the Audit Committee. Further the Company has continued its efforts toalign its processes and controls with best practices and has put in place a process wiseinternal control framework across the Company.


The Company has young capable experienced and dedicated manpower and variousprofessionals support from in house and external sources with expertise in different areasleading the growth of Company towards better operational and financial position. Thenumber of employees as at March 31 2018 stood at 7653 (Previous Year 5801). During FY2017-18 the Company continued to show signs of positivity and growth providing theManagement an appetite for enhancing potential and driving growth and development of itspeople. Initiated various career progression & retention programs like createdinternal pool of first line leaders internal job posting over 200 employees werepromoted this would leads in retention of employees across all level has been 83% thatleads to decrease in attrition rate. Further Human Resource department is continuouslyreviewing the expense policy to become more cost effective. Further your Company has alsolaunched Microfinance course in partnership with NSE/BSE. Furthermore to boost theemployee morale launched core values of SATIN and to celebrate overcoming the mostdifficult time Company has also organized "Satin Utsav" the employee forum withover 500 employees across functions and geographies that envisages the morale of theemployees. Further during the year under review your Company has been ranked 34thfor Dream Companies to work in 2018 out of 50 companies felicitated by World Congress HRD.


The Reserve Bank of India in exercise of its powers under The Reserve Bank of IndiaAct 1934 has granted NBFC-MFI (Serial No. B-14.01394) status to the Company and theCompany has no public deposit. The Company has neither accepted public deposit duringpreceding financial year nor would accept any public deposit during the financial year2018-19.


Your Company has been following all relevant guidelines issued by Reserve Bank of Indiafrom time to time. Further your Company has Capital Adequacy Ratio of 23.65% as on March31 2018. The Non-Banking Financial Company - Micro Finance Institutions (Reserve Bank) -Directions 2011 ("NBFC-MFI Directions") were issued in December 2011 by theReserve Bank of India (RBI) pursuant to the Reserve Bank of India Act 1934 ("RBIAct"). The Company satisfies these conditions and was reclassified as a Non-BankingFinancial Company - Micro Finance Institution ("NBFC-MFI") on November 6 2013.As a result the Company is required to comply with the NBFC-MFI Directions. In view ofthe same Company is in compliance with the "Master Direction - Non-Banking FinancialCompany - Systemically Important Non-Deposit taking Company and Deposit taking Company(Reserve Bank) Directions 2016 (as amended from time to time)". These Directionsinclude guidelines on qualifying assets criteria asset classification and provisioningpricing of credit capital adequacy multiple lending overborrowing compliances and fairpractices etc. Further the Company generally complies all conditions and directionsissued by RBI from time to time.


As required under regulation 17 to regulation 27 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Uniform Equity Listing Agreements executedwith the Stock exchanges a detailed report on corporate governance has been provided in aseparate section which forms part of this annual report. The Company has complied with therequirements of Corporate Governance that have to be made in this regard. The requisitecertificate from M/s S. Behera & Co. Practicing Company Secretary (ICSI PCSRegistration No. 5980) regarding compliance with the conditions of Corporate Governance asstipulated in schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is annexed to this report.


In terms of section 197 of the Companies Act 2013 read with rule 5 sub-rule (1) (2)& (3) of Companies (Appointment & Remuneration) Rules 2014 the necessarydisclosures are annexed as Annexure IV with this report.


The equity share of the Company is listed on BSE Limited (BSE) and National StockExchange Limited (NSE).

Pursuant to Board approval dated November 09 2016 your Company is voluntarilydelisted from the Calcutta Stock Exchange ("CSE") with effect from January 192018 vide their approval letter dated January 18 2018. Your Company is now listed withNational Stock Exchange and Bombay Stock Exchange i.e. NSE and BSE. Your Company has nodue pending with the any stock exchange.


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


Information pursuant to section 134 of the Companies Act 2013 read with rule 8(3) (a)& (b) of the Companies (Accounts) Rules 2014 being not applicable and hence not beingdisclosed.

Further Information pursuant to rule 8(3) (c) of the above said rule is mentionedbelow.

Expenditure in foreign currency (on accrual basis):

(Amount in Rs.)
Nature For the year ended March 31 2018 For the year ended March 31 2017
Travelling expenses 2899447 6978354
Professional fee 7430967 11316229
Interest payment - External Commercial Borrowing 34449260 35504242
Sitting fee 120000 20000
Business promotion - 256004
Share/ Debenture issue expenses 8245897 6804618
Total 53145571 60879447


Your Directors would like to place on record their gratitude for the cooperationreceived from lenders our valued customers and shareholders. The Board in specificwishes to place on record its sincere appreciation of the contribution made by all theemployees towards growth of the Company.

For and on behalf of the Board of Directors
H P Singh
Place: Delhi (Chairman cum Managing Director)
Date: May 30 2018 (DIN: 00333754)



Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and rule 8(2) ofthe Companies

(Accounts) Rules 2014)

This form pertains to the disclosure of particulars of contracts/arrangements enteredinto by the Company with related parties referred to in sub-section (1) of section 188 ofthe Companies Act 2013 including certain arm's length transactions under third provisothereto.

Details of contracts or arrangements or transactions not at arm's length basis

There were no contracts or arrangements or transactions entered during the year endedMarch 31 2018 which were not at arm's length basis.

Detail of material contracts or arrangements or transactions at arm's length basis

Name of the Related Party Nature of Contract Date of Approval by Board Nature of Relationship Duration of Contract Silent Terms Amount paid as advance if any
Taraashna Services Ltd. Investment in subsidiary May 26 2017 Subsidiary Company N.A. As specified in Board Approval Not Applicable
Office Rent November 13 2017 Subsidiary Company 11 Month from November 15 2017 As specified in Rent Agreement Nil
Satin Housing Finance Limited Investment in subsidiary May 26 2017 Subsidiary Company N.A. As specified in Board Approval Not Applicable
Rent received November 13 2017 Subsidiary Company 11 Month from November 15 2017 As specified in Rent Agreement Nil
Niryas Food Products Private Limited Rent received November 09 2016 Influence of Key managerial Personnel & Relatives 11 Months from November 01 2016 As specified in Rent Agreement Nil


For and on behalf of the Board of Directors
H P Singh
Place: Delhi (Chairman cum Managing Director)
Date: May 30 2018 (DIN: 00333754)

Annexure IV

Details pertaining to section 197(12) of Companies Act 2013 read with rules 5(1) ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014:

(i) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the Financial Year:

S. No. Name of Director(s) Annual Remuneration(in Rs.) for FY 2017-18 Median Annual Remuneration of Employees for the Financial Year 2017-18 (in Rs.) Ratio of remuneration of each director of the median remuneration of the employees for Financial year
1 H P Singh 15538684 406488 38.2:1

(ii) The percentage increase in remuneration of each director Chief Financial OfficerCompany Secretary in the financial year.

S.No. Name of Director(s) Chief Financial Officer Company Secretary Annual Remuneration during financial year 2016-17 (In Rs.) Annual Remuneration during financial year 2017-18 (In Rs.) Percentage increase in remuneration since last financial year
1 H P Singh Chairman cum Managing Director 19013770 15538684 -18.28%
2 Jugal Kataria Chief Financial Officer 6971750 7200020 3.27%
3 Choudhary Runveer Krishanan Company Secretary & Compliance Officer 2022500 2607500 28.92%

(iii) The percentage increase in the median remuneration of employees in the financialyear:

Median Annual Remuneration (In Rs.) of employees for the F/Y 2016-17 Median Annual Remuneration (In Rs.) of employees for the F/Y 2017-18 Percentage increase in Median Annual remuneration (In Rs.) of employees
421000 406488 -3.44%

(iv) Number of permanent employees on the rolls of the Company - 7653

(v) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration - Notapplicable

(vi) Names of the top ten employees in terms of remuneration drawn and the name ofevery employee who-

(i) If employed for a part of the financial year was in receipt of remuneration forany part of that year at a rate which in the aggregate was not less than eight lakh andfifty thousand rupees per month; - None

(ii) If employed throughout the financial year or part thereof was in receipt ofremuneration in that year which in the aggregate or as the case may be at a rate whichin the aggregate is in excess of that drawn by the managing director or whole-timedirector or manager and holds by himself or along with his spouse and dependent childrennot less than two percent of the equity shares of the company. - None

(iii) If employed throughout the financial year was in receipt of remuneration forthat year which in the aggregate was

not less than one crore and two lakh rupees;- None

List of Top Ten Employees of the Company:

S.No. Name of Employee Designation Remuneration received (amount in Rs.) Nature of employment whether contractual or otherwise Qualifications and experience of the employee; Date of commencement of employment Age Last employment held by such employee before joining the company Percentage of equity shares held by the employee in the company Relation with any director or manager of the company
1. Mr. H P Singh Chairman cum Managing Director 15538684 Permanent CALLB October 16 1990 57 NA 0.87% Brother of Mr. Satvinder Singh
2. Mr. Sanjay Mahajan Chief Information Officer 10000000 Permanent PGDCSA- IT 27 Years January 06 2016 49 Bata India Limited - None
3. Mr. Dev Verma Chief Operating Officer 7255004 Permanent PGDBM 21 Years September 142016 46 SKS Microfinace - None
4. Mr. Jugal Kataria Chief Financial Officer 7200020 Permanent ICWACS CA 27 Years April 01 2000 50 Berger Paints Ltd - Rajdoot Division 0.14% None
5. Mr. Subir Roy Chowdhury Chief Human Resource Officer 6872444 Permanent PGDM-HR 21 Years April 04 2016 45 Magma Fincorp Limited 0.01% None
6. Mr. Ram kumar Gunasekaran Senior Vice President 6166668 Permanent MBA 17 Years October 19 2016 42 Tata Motors Finance - None
7. Mr. Partha Mukherjee Dy. COO 4396670 Permanent MBA 17 Years April 18 2016 47 NCDEX e Markets Ltd 0.00% None
8. Mr. Ashish Gupta Head- Finance 3858334 Permanent CA MBF 11 Years September 252015 35 New Habitat Housing Finance & Development Limited - None
9. Mr. Amit Kumar Gupta Vice President - Account & Finance 3521780 Permanent CA LLB 13 Years May 12 2008 39 Lea Associate South Asia Pvt. Ltd 0.01% None
10. Mr. Sulabh Jain Vice President- Audit 1375000 Permanent PGDBM 09 Years November 01 2017 44 Simpa Energy India Pvt. Ltd. - None

(vii) The Board hereby affirm and declare that the remuneration being paid to theemployees(s) director(s) key managerial personnel(s) is as per the Nomination &Remuneration policy for directors key managerial personnel (KMP) & senior managementand other employees approved by the Board.

Place: Delhi H P Singh
Chairman cum Managing Director
Date: May 30 2018 DIN:00333754