Friday, February 1, 2013

SKS Microfinance Limited turns around with a profit of Rs 1.2 crore

Reverses the trend of seven consecutive quarters of losses; growth momentum accelerates with 40%
quarter-on-quarter jump in drawdowns; 16% quarter-on-quarter core income growth in non-AP states

Hyderabad, January, 2013: SKS Microfinance Limited today announced its return to profitability with a profit
of Rs 1.2 crore in Q3-FY13, reversing the trend of seven consecutive quarters of losses caused by the external
event of Andhra Pradesh microfinance crisis. The Company incurred a loss of Rs. 262 crore in Q2-FY13 and a
loss of Rs 428 crore in Q3-FY12.

SKS Microfinance Limited sustained growth momentum in non-Andhra Pradesh states with its core interest
income in those states increasing by 16% to Rs 79 crore in Q3-FY13 from Rs 68 crore in Q2-FY13 (Rs 82 crore
in Q3-FY12). The Company’s loan disbursements rose by 14% from Rs 690 crore in Q2-FY13 to Rs 784 crore
in Q3-FY13 as its non-AP portfolio grew by 9% from Rs 1372 crore in Q2-FY13 to Rs 1496 crore in Q3-FY13.
Collection efficiency in 17 non-AP states continues to be robust at 99.8% (99.2% in Q2-FY13). As for Andhra
Pradesh, the portfolio in the southern state has been reduced to a nil in Q2-FY13 from a high of Rs 1,491 crore at
the start of AP microfinance crisis in October 2010.

The growth momentum has been accelerated on account of the increasing supply-side support. Drawdowns
have registered a 40% growth from Rs 405 crore in Q2-FY13 to Rs 566 crore in Q3-FY13 as the dedicated
organization-wide efforts in implementing a seven-pronged turnaround strategy began registering never-before
gains.

"Fully providing for the Andhra Pradesh exposure, optimization of cost structure, delivering promises, coming
out of the supply-side shock, portfolio protection and recapitalization are the building blocks of SKS Microfinance
Limited's turnaround strategy,” said Mr S. Dilli Raj, Chief Financial Officer, SKS Microfinance Limited. “By
returning to profitability, we have successfully emerged out of the Andhra Pradesh microfinance crisis. With a
capital adequacy of 39% and sufficient liquidity, we are well equipped to reap the fruits of sector consolidation,
advantageous change in the competitive landscape, a favourable regulatory climate and, of course, the enhanced
business prospects."

SKS Microfinance Limited had a networth of Rs 388 crore and a capital adequacy of 38.5% (26.2% without RBI
dispensation on AP provisioning) as of December 31, 2012. In addition, the unavailed deferred tax benefit stands
at Rs 556 crore and will be available to offset tax on future taxable income. The Company has healthy cash and
bank balances of Rs 304 crore.

The Company’s significant cost optimization initiatives too have aided a faster-than-expected turnaround with
branch consolidation from 2,403 in Q3-FY11 to 1,298 in Q3-FY13 and headcount rationalization from 25,735 in
Q3-FY11 in 11,195 in Q3-FY13.

About SKS Microfinance Limited:

SKS Microfinance Limited (SKS) is a non-banking finance company (NBFC), registered and regulated by the
Reserve Bank of India, whose mission is to provide financial services to low-income households. SKS operates
across 17 states of India. They include: Andhra Pradesh, Karnataka, Maharashtra, Odisha, Madhya Pradesh,
Bihar, Uttar Pradesh, Rajasthan, Uttaranchal, Haryana, West Bengal, Jharkhand, Chhattisgarh, Gujarat, Kerala,
Punjab and Delhi.

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