Mumbai: A day after SKS Microfinance Ltd reported a 38.4% decline in net profit for the quarter ended 31 December 2010, the company’s stock lost 3.25% in Tuesday’s trade on the Bombay Stock Exchange (BSE) to close at Rs661.85 per share. It regained some ground after losing as much as 4.8% in intra-day trade.
BSE’s benchmark equity index, Sensex, lost 0.95% on Tuesday to close at 18969.45 points.
After reaching a high of Rs1490.7 per share on 28 September 2010, share prices of SKS has lost 55.6% since. The Sensex lost 4.81% in the same period.
The firm that lends to mostly poor borrowers, especially women, had to set aside money and write-off bad loans to the tune of Rs100 crore in the December quarter, nearly ten times more than the corresponding figure for the year-ago period.
The provisioning was mostly on account of meeting the guidelines laid out in the Malegam Committee report and collections dropping drastically in Andhra Pradesh, where the government passed a legislation imposing strict conditions on microfinance institutions (MFI) following reports of some borrowers alleged committing suicides due to coercive recollection methods resorted to by some MFIs. The Reserve Bank of India constituted the Malegam Committee to look into the issues of MFI industry and suggest measures.