SKS Microfin to raise Rs 400 crore

This is going to be a single tranche operation preferably through QIP, said the CFO

SKS Microfinance Limited, the only listed entity in the Indian microfinance space, has decided to raise a capital of Rs 400 crore in the next financial year (FY15) by diluting equity up to 20 per of the pre-issue capital.

On Tuesday, its board of directors approved the resolution to this effect, as it sets out to create SKS Microfinance 3.0 to tap into the new opportunities.
 

"This is going to be a single tranche operation preferably through qualified institutional placement( QIP) to be carried out some time in FY15 as we have set out to focus on new opportunities, which require basic ingredients like capital and technology among others," S Dilli Raj, chief financial officer, SKS Microfinance told Business Standard.

 

The company is entering the growth phase after sustaining the recovery and profitability for over an year now following a deep financial crisis caused by the clampdown on MFI activities by Andhra Pradesh government way back in October 2010.

 

SKS plans to increase its non-Andhra portfolio outstanding to Rs 3,800 crore to Rs 4,000 crore in the financial year 2014-15 from Rs 3,800 crore as of December 2013, the company said in a statement on Wednesday. It has also issued a profit guidance of Rs 125 crore for FY15 as compared to an expected guided net profit of Rs 55-Rs 60 crore for the current year.

 

The company said it would be addressing the growing demand among its customers for an entire range of products and services, including insurance, mobile loans, loans for solar lights in addition to micro credit, which expected to remain the core business of the company.

 

"SKS Microfinance 2.0 was the result of our painstaking focus on customer protection practices including 3% cap on return on assets in the MFI business, revamping of customer grievance redressal mechanism," among other things, said M R Rao managing director and CEO of the company.

 

Management changes

 

The company board has also effected changes within the existing management team. While MR Rao continue as managing director and CEO, chief financial officer Dilli Raj has been elevated to the position of president of the company.  In his place, Ashish Damani, executive vice president, has been appointed as the chief financial officer. While KV Rao, senior vice president-operations has been appointed as the chief operating officer among other changes. Both Rao and Dilli Raj will focus more on strategic initiatives looking at new opportunities, according to the company officials.