Home >Companies >SKS Microfinance to raise `400 crore in FY15

Hyderabad: SKS Microfinance Ltd, India’s only listed microlender, plans to raise 400 crore in the next fiscal year with a maximum equity dilution of 20%.

“The proposed capital raise of up to 400 crore will fund such growth opportunities besides reinforcing the capital position of SKS Microfinance," SKS said in a disclosure to BSE on Wednesday.

The microlender board met on Tuesday to finalise its corporate plan for the fiscal year ending March 2015, which the company calls SKS 3.0.

“SKS 3.0 plans to address the growing demand among its customers for an entire range of products and services including insurance, mobile loans, loans for solar lights, etc, in action to micro credit, which will remain the company’s core business," SKS said.

The company plans to increase its non-Andhra Pradesh portfolio outstanding from 2,364 crore in December to 3,800-4,000 crore by the end of 2014-15.

SKS also issued a profit forecast of 125 crore for the next fiscal year. The forecast comes close on the heels of its recent announcement that there could be a positive surprise in its guided net profit of 55-60 crore in the fiscal year to March, the statement said.

The company’s cash and bank balances stood at 309 crore.

SKS said it has also decided to realign its top structure. As part of its restructuring exercise, chief financial officer S. Dilli Raj will be promoted as president, while M.R. Rao will continue as managing director and chief executive officer. Ashish Damani, currently executive vice-president, finance, will replace Raj as CFO.

SKS is staying on the course of a slow and painful recovery from the crisis that beset the industry in 2010. The microlender swung to a profit in the fiscal third quarter of the last fiscal year after reporting losses for seven consecutive quarters.

SKS operates across 15 states with a branch network of 1,255. The company has 4.4 million active borrowers. SKS Microfinance and other microfinance institutions (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, following 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 microlenders’ representatives from approaching the doorstep of their customers. Loan recoveries plunged to as low as 5% in Andhra Pradesh and funding dried up for MFIs after the law took force.

Since the crisis erupted, SKS has written off loans totalling 1,362 crore and pared its staff in the state to 1,200 from around 7,000 prior to the crisis. SKS Microfinance has also scaled down the number of branches in Andhra Pradesh to 120 from 550.

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