6247

SKS Microfinance Ltd posts a profit after seven quarters

Net profit was Rs.1.15 crore in the quarter, compared with a loss of Rs.428 crore in the year-ago period
Comment E-mail Print Share
First Published: Thu, Jan 24 2013. 11 40 PM IST
A file photo of SKS chief financial officer Dilli Raj. Photo: Mint
A file photo of SKS chief financial officer Dilli Raj. Photo: Mint
Updated: Thu, Jan 24 2013. 11 45 PM IST
Hyderabad/Mumbai: SKS Microfinance Ltd, India’s only listed micro lender, ended a seven-quarter loss-making streak on Thursday by posting a small profit for the three months ended 31 December, helped by higher loan demand in markets outside of Andhra Pradesh and significant cost cuts.
Net profit was Rs.1.15 crore in the quarter, compared with a loss of Rs.428 crore in the year-ago period, the microfinance institution (MFI) said.
The profit came despite a 2.3% decline in total income from operations to Rs.85.05 crore from Rs.87.07 crore.
“We are definitely past the crisis phase in Andhra Pradesh. We have fully provided for all losses in the state and believe that the worst is over for us as far as the Andhra Pradesh crisis is concerned,” chief financial officer Dilli Raj said.
He expressed optimism that the MFI would stage a full recovery in the next fiscal, which begins on 1 April.
SKS and other MFIs are trying to recover from the industry-wide crisis sparked by an October 2010 law put in place by Andhra Pradesh, the biggest market for loans made to low-income earners.
The law sought to rein in lending by MFIs, responding to reports that coercive loan recovery practices were driving over-extended borrowers in the southern state to commit suicide.
The law made government approval mandatory for every second loan given to the same borrower, extended the loan recovery period, and barred micro lenders’ representatives from approaching the doorstep of their customers.
Since the crisis, SKS has written off loans totalling Rs.1,362 crore and pared its staff in the state to 1,200 from around 7,000 prior to the crisis.
SKS has also scaled down the number of branches in Andhra Pradesh to 120 from 550.
Loan disbursements rose 14% on a sequential basis to Rs.784 crore in the December quarter from Rs.690 crore in the three months ended September.
The micro lender’s non-Andhra Pradesh portfolio was Rs.1,496 crore, as of 31 December, up 9% on a sequential basis. The company said the collection efficiency in 17 states, excluding Andhra Pradesh, was robust at 99.8%.
The company had cash and bank balances of Rs.304 crore. In addition, the unavailed deferred tax benefit stands at Rs.556 crore and will be available to offset tax on future income.
SKS reduced its portfolio in Andhra Pradesh to nil in the quarter ended September from a high of Rs.1,491 crore at the start of the microfinance crisis.
“With no bearing of Andhra Pradesh portfolio on its books and Rs.556 crore unavailed deferred tax benefit, things are looking quite positive for SKS,” said Shadab Rizvi, an analyst tracking microfinance at the investment banking division of Mumbai-based securities house Darashaw and Co. Pvt. Ltd.
“The full recovery in terms of return on capital employed could take some more time,” Rizvi said.
Shares of SKS dropped by 4.73% to close at Rs.164.20 on BSE on Thursday, while the benchmark Sensex declined by 0.51% to 19,923.78 points.
Comment E-mail Print Share
First Published: Thu, Jan 24 2013. 11 40 PM IST
blog comments powered by Disqus
  • Wed, Apr 16 2014. 06 11 PM
  • Wed, Apr 09 2014. 05 19 PM
Subscribe |  Contact Us  |  mint Code  |  Privacy policy  |  Terms of Use  |  Advertising  |  Mint Apps  |  About HT Media  |  Jobs
Contact Us
Copyright © 2014 HT Media All Rights Reserved