SKS loss widens to Rs 428 cr

Confident of returning to profitability from 2012-13.

SKS Microfinance on Thursday said its net loss for the quarter ended December 31 widened to Rs 427.8 crore from Rs 385 crore in the previous quarter. However, the management remained confident of returning to profitability from the first quarter of the next financial year.

“Our profitability has been impacted, largely by credit costs so far. Now, we have made adequate provisions to cover it. We expect to become profitable again from the April-June quarter,” chief financial officer S Dilli Raj told Business Standard.

He added revenues from new businesses would also increase the firm’s earnings in the next financial year.

Raj said SKS wrote off Rs 331 crore of loans disbursed in Andhra Pradesh. Its loan exposure in the state is Rs 488 crore, against which it has deferred tax credit of Rs 512 crore. “So, there will not be any significant rise in our provisions in the coming quarters.

It clearly indicates we have left the crisis behind us, and will start making profits from next financial year,” he said. Provisions and write-offs stood at Rs 358.7 crore, compared with Rs 100.8 crore a year ago.

SKS’ loan book narrowed, with dues falling to Rs 1,810 crore as of December 31 from Rs 2,500 crore three months ago. The company expects its loan book to start expanding from the current quarter, driven by growth in markets other than Andhra Pradesh.

SKS plans to form a subsidiary in the next financial year to step up its gold loan business. The portfolio of such loans is estimated at around Rs 28 crore.

“We are also looking to firm up other new lines of businesses like mobile handsets and retail insurance. All these new businesses would also help us improve our financials next year,” Raj said.

SKS plans to raise Rs 300-500 crore through a qualified institutional placement by the end of March, though its board had approved fund-raising of up to Rs 900 crore. “We don’t need that much money. Our capital adequacy ratio is 45 per cent and net worth is Rs 762 crore....We will use the funds to capitalise on business opportunities outside Andhra Pradesh,” Raj said. The company is also exploring fund-raising through external commercial borrowings.

GRIM PICTURE SKS Microfinance
(in Rs  crore)	41,254.00	10-Dec	% Chg*	11-Sep	% Chg**
Interest earned	81.78	363.15	-77.48	114.13	-28.34
Other income	8.93	4.99	78.96	8.16	9.44
Total income	90.71	368.14	-75.36	122.29	-25.82
Interest expended	41.02	97.03	-57.72	52.73	-22.21
NII	40.76	266	-84.68	61.4	-33.62
Net profit	-427.79	34.15	—	-385.54	—
*chg over Y-o-Y and **chg over Q-o-Q Data compiled by BS Research Bureau                                           Source : Capitaline