Note No. l General Information Satin Creiitcare Network Limited ("The Company") is a public limited company and incorporated under the provision of the Companies Act, 1956. The Company is a non deposit accepting micro finance non banking financial company, registered as NBFC-MFI with The Reserve Bank of India ("RBI").TheComp.iny is engaged in the micro-finance activities. Note No.2 Significant Accounting Policies 1. BASISOFbrPARATIONOFFINANCIALSTATEMENTS The financial statements have been brpared under historical cos) convention in accordance with the generally accepted accounting principles and the applicable accounting standards notified under Section 133 o f t h e Companies Act,2013, read with Rule 7 of the Companies (Accounts) Rules, 2014and relevant provision of the CompaniesAct,2013 as applicable and the guidelines issued by the Reserve Bank of India. Accounting policies have been consistently applied except where a newly issued accounting standardora guideline is initially adopted or a revision to the ex is ting accounting standard requires a change in the accounting policy hitherto in use. The management evaluates all recently issued or revised accounting standatdsonan on gouigbasis. All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule III to the Companies Act, 2013. The Company has asceitained its operating cycle as 12 months for the purpose of current, non-current classification of assets and liabilities. 2. USEOFESTIMATES The brparation of financial statements is in conformity with the Indian Generally Accepted Accounting Principles (GAAP) and requires management to make estimates and as sumptions that affect the reported amounts of as sets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Changes in estimates are reflected in the financial statements in which chuiges are made and their effects disclosed in the notes to the financial statements. 3. TANGIBLE ASSETS All Tangible assets owned by the Company are suited at hi store cost less accumulated debrciation. Tangible assets acquired on account of amalgamation are slated at the <jcquisition value agreed in the amalgamation agreement. Capital work in progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not ready for their intended use as at the Balance sheet date. 4 INTANGIBLE ASSETS Intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated debrciation and impairments. Computer soAwarecost are capitalized and amortized brscribed in Schedule II of Companies Act 2013. 5. DEbrCIATION Debrciation on tangible assets is provided on the Written-down method over the useful lives of assets estimated by the Management. Debrciation for assets purchased/sold during a period is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives en a written-down basis, commencing from the date the asset is available to the Company for its use. The Management estimates the useful lives for the other fixed assets as follows 6. INVESTMENTS (i) Investments that arc readily realizable and are intended to be held for not more than one year from the date, on which these investments are made, are classified as current investments. All other investments are classified as Long term investments. (ii) The Company values its Investments based on the accounting standard issued by the Institute of Chartered Accountants of lndia as under: a. Investment held as long-term investments is valued at cost. Provision for diminution in value is not made unless there is a permanent fall in their net realizable value. b. Cuirent investments are valued at lower of cost or net realizable value. 7. CUR RENT ASSETS A- Trade Receivables: Loan portfolio comprises of Trade receivables under finance contracts with the borrower; as on the Balance Sheet date. B. Cash and Cash Equivalents: Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash on hand, demand deposits with banks and other short term highly liquid investments that a~e readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash r. ature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. 8. REVENUE RECOGNITION (i) The Reserve Bonk of India's prudential norms on income recognition and provisioning forbad and doubtful debts has been followed. (ii) Subject to the above, specific incomes have been accounted for as under a. Interest income on 1oans is recognized under (he interne! rate of ret urn method on accrual basis except in case of non-performing assets where it is recognized upon realizations per RBI norms. b. Interest income on deposits with bank is recognized or. a time proportion accrual basis taking into account the amount outstanding and the rate applicable. C. Loan processing fee is recognized as income on accrual basis. d. Profit on securitization of loan portfolio through bankruptcy remote Special Purpose Vehicle (SPV) is recognized over the residual life of the securitization transaction in terms of RBI Guidelines. Profit on sale of loan assets through direct assignment, without any recourse obligation or otherwise is amortized over the residual life of the loan.Net loss, if any, arising on account of securitization and direct assignment of loan assets is recognized immediately at time of sale. e. Miscellaneous Income: Any other lncome is accounted for as and when accrued. 9. ASSETCLASIFICATIIONAND PROVISIONING NORMS The Company being a NBFC-MFI adopts the following norms based on the guidelines'ins tractions issued by the Reserve Bank of India:- Asset Classification Norms:- (i) Standard asset means the asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any problem or carry more than normal risk attached to the business; (ii) Nor. Performing asset means an asset for which, interest/principal payment has remained overdue for a period of 90 days or more. Provisior.iny Norms:- Thcaggregatc loan provis ion is maintained by the Company atany pointof timeshall not be less than the higher of:- a) 1%ofthe outstanding loan portfolio, or b) 50% of the aggrega te 1oan installments which are overdue for more than 90 days and less than 180 day's and 100% of the aggregate loan installments which are overdue for 180daysormore. 10. BOR ROWING COSTS Borrowing costs, which are directly attributable to the acquisition ''construction of fixed assets, till the time such assets are ready for intended use, are capitalized as a part of t he cost of assets. Borrowing costs consist of interest and other borrowing costs t hat the Company in cuired in connection with borrowing of the funds Interest cost is expensed off on the accrual basis. Other Incidental Borrowing Costs namely Processing Fee, Due Diligence charges and Stamp duty charges are amortized over the period of the loan. All other borrowing costs other than mentioned above are expensed in the period they are incurred. In case any loan is brpaid/ cancelled then the unamortized borrowing cost, if any, is fully expensed off on the date of brpayment/cancellation. In case of unamortized identified borrowing costisou Lstandingat the year end, it is classified underlcans and advances as unamortized cost of borrowings. 11. FOREIGN CURRENCY Transactions in foreign currency are recorded at the rates of exchange brvalent on the date of transaction. Exchange difference, if any, arising from foreign currency transaction are dealt in the Statement ofProfit & Loss at year end rates. Monetary items (Payables, loans etc.) denominated in foreign currency are reported using the closing exchange rate on each Balance Sheet date. 11 SHARE /DEBUNTURE ISSUE EXPENSES All exper.ses pertaining to issue of share capital (both equity and brference share capital) and Debentures are adjusted /written off with Securities brmium Reserve Account, if any, after the date of allotment as per the provisions of the Companies Ac t, 2013. 13. PROVISIONS AND CONTINGENT LIABILITIES Provisions involving substantial degree of estimation in measurement are recognized when there is brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of the expenditure required to settle the brsent obligation at the Balance sheet date and are not discounted to its brsent value. Further the company being a NBFC-MFI also complies with the guidelines issued by the Reserve Bank of India regarding the various provisioning norms. Contingent liabilities are disclosed when there isa possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a brsent obligation that arises from past events where it is either not probable that the outflow of resources will be required to settleora reliable estimate of the amount cannot be made, is termed as a contingent liability. Contingent liabilities are not recognized but are disclosed in tie notes. Contingent Assets are neither recognized nor disclosed in the financial statements. 14 EMPLOYEES RETIREMENT BENEFITS Employee benefits includes provident fund, employee state insurance scheme, gratuity fund and compensated absences. a) Short-term employee benefits including Salaries, short term compensated absences (such as a paid annual leave) where the absences are expected to occur within twelve months after the end of the period in which the employees render the related service, profit sharing and bonuses payable within twelve months after the end of the period in which the employees render the related services and non-monetary benefits for current employees are estimated and measured on an un-discounted basis. b) Defined Contribution Plan Company's contribution paid/payable during the year to Provident Fund, Pension fund and employee state insurance scheme are recognized in the statement of Profit and Loss based on amount of contribution required to be made and when services are rendered by the employees c) Defined Benefit Plan Liabilities for gratuity funded in terms of a scheme administered by the Life Insurance Corporation of India, are determined by actuarial valuation on Projected Unit Credit Method made at the end of each Balance Sheet date, provision for liabilities pending remittance to the fund is carried in the Balance Sheet. d) Locg term employee benefits Liability for compensated absences is provided based on actuarial valuation earned out at the end of the financial period using projected unit Credit Method and is not funded. Past services cost is recognized immediately tothe extent that the benefits are already used and otherwise is amortized on straight line base over the average period unit the benefits become vested. The retirement benefits obligation recognized in the balance sheet rebrsents the brsent value of die defined benefits obligation as adjusted for unrecognized past service cost, as redeemed by the fair value of scheme assets. Compensated absences which are not expected to occur within 12 months after the end of period in which the employee rendered the related services are recognized as a liability at the brsent value of the defined benefits obligation as at the bal ance sheet date. Actiarial gains and losses are recognized immediately in the statement of Profit and Loss as income or expense in the period in which they occur. Obligation is measired at the brsent value of estimated future cash flows using a discounted rate that is determined by reference to market yieksat the Balance Sheet date on Government bonds. 15. IM PAIRM ENT OF ASS ETS The Company assesses at each balance sheet date whether there is an indicati on that an asset may be impaired. An asset is treated ai impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to Statemerr of Profit and Loss in the year in which the assec is identified as impaired. The Impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. 16. TAXATION Tax expense for the period, comprising of current tax and deferred tax are included in the determination of the net profit or loss forth: period. (i) Current tax expense is made based on the estimated tax liability as per the appropriate provisions of the Income Tax Act 1961 and considering the brvious final assessment orders. The provision for current tax for the year will benet off any provisions related to t hat year. (ii) Excess/short provision of income tax relating to eariier years is disciosed separately in the accounts. (iii) Deferred Tax Assets and Liabilities for timing differences between tax profit and book profit t is accounted for using the tax rates and laws that have been enacted or substantially enacted as on balance sheet date. Deferred Tax Assets are reccgnized to the extent there is reasonable certainly that these assets can be realized in future. At each Balance Sheet date, theCompany reassesses unrecognized deferred tax assets, if any. (iv) Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets and liablities rebrsenting the current tax and where the deferred tax assets and deferred tax liabilities relate to taxes on iraxmelevied by the same goveming taxation laws. 17. EARNING PER SHARE In determining earning persh are, the Company considers the net profit after tax and includes the post tax effect of any extraordinary /exceptional item. The number of shares used in computing basic earning per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per share comprises the weight edaverage shares considered for deriving basic earnings per share and also the weighted average number of equity shares the could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shores arc adjusted for the proceeds tcccivablc, had the shares been actually issued at fair value. Dilutive potential equity shares are deemed converted at the beginning of the pericxl, unless seued at a later date. The number of shares and potential dilutive equity shares are adjusted for any stock splits and bonus shares issued effected prior to the approval of the financial statements by the board of directors. EMPLOYEE STOCK OPTION SCHEME(ESOS) The Company has formulated Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option S theme and Employee Stock Purchase Guidelines, 1999) as a mended from time to time. These scheme s provide for grant of options to employees of the Company that vest in a graded manner and that are to be exercised within a specified period. Further, the new guidelines by Securities and Etchange Board of India (SEBI) came into force ie. SEBI (Share Based Employee Benefit) Regulations, 2014 (new regulation) according to which certain modification were required to be made in the trust deed formulated under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999). Asa result of new Regulations coming into effect, the earlier SEBI (Employ ee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999) Guidelines have been repealed. With the evolution of new SEBI Law, the existing Employee Welfare Trust need was realigned, so as to abide by the requirements o f t h e new Regulations floated by the Market Regulator. Measurement and disclosure of ESOS is done in accordance with new regulation and guidance note on Accounting for employee share based payments issued by The Institute of Chartered Accountants of India. The Company measures compensation cost relating to employee stock schemes accordingly as per the guidance note. The compensation expense is recognized over the vesting period of the optiens on the sraightline basis. LEASES Leases in which a significant portion o f t h e risks and rewards of ownership are retained by the Lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of lease. The Company leases certain tangible assets and such leases where the Company has substantially all the risks and rewards of owners hip are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased asset and the brsent value of the minimum lease payments. OPERATING CYCLE Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current 11. With the enactment of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications issued by Ministry of Corporate Affairs, the Company has undertaken activities as per the Corporate Social Responsibility ("CSR") Policy'. During the financial year 2014-15, the Company has incurred a sum of Rs. 20,64,260.00 towards corporate social responsibilities i n accordance with section 135 of the Companies Act 2013. 12. The figures of the brvious year have been regrouped / reclassified wherever necessary to make them comparable with the figures of the current year. As per our report of even date annexed For AK. Gangahtr & Co. Chartered Accountants For and on behalf of Board of Directors A.K.Cangaher H P Singh Satvinder Singh Proprietor (Chairman cum Managing Director) (Director) M. No.083674 Firm ICAI Reg. Nc,004588N Jugal Kataria Choudhary Runveer Krishanan (Chief Financial Officer) (Company Secretary& Compliance Officer) Place: Delhi Dated: 25" May, 2015 |