SKS Microfinance, the biggest micro-lender in the country, is set to post its first full-year profit this fiscal after regulatory changes hit its business in 2010.
SKS Microfinance, the biggest micro-lender in the country, is set to post its first full-year profit this fiscal after regulatory changes hit its business in 2010.
Based on the performance for the quarter ended March and the reduction in the full-year losses for fiscal 2013, the company is expecting to post a profit of Rs 55-60 crore in the next fiscal, a senior company official said.
“We are targeting a disbursement of about Rs 4,500-4,800 crore in the current fiscal as against Rs 3,200 crore in the last. This would result in a total portfolio of about Rs 2,800-3,000 crore as against Rs 2,000 crore in fiscal 2013. All this would result in a profit of Rs 55-60 crore for the full year in fiscal 2014,” S Dilli Raj, SKS’ chief financial officer, told dna.
For the quarter ended March 2013, SKS posted a 11% year-on-year rise in income at `95.09 crore as against `85.05 crore in the December quarter. Net profit doubled to `2.70 crore as against `1.15 crore posted in the sequential quarter.
For the full year ended March 2013, the company’s income fell to Rs 332.2 crore from Rs 435.7 crore in the previous year. It, however, booked a lower loss of about Rs 297.14 crore as against Rs 1,360.59 crore in the previous year.
“We are confident of booking profits for the full year this fiscal. The cost of funds too has significantly come down to about 12% from the earlier 13.2%. There is further headroom for us to bring the costs down though the reduction in the rates is linked to the anchor rates,” Raj said.
However, the company is not planning to infuse any further equity. Instead it would go in for an incremental debt of about Rs 3,600 crore this fiscal as against Rs 2,875 crore in the last.
The company has an accumulated loss of about `1,360 crore on its books, though its net worth is positive at about Rs 390 crore.
The company had slipped into significant losses after Andhra Pradesh, a key market for microfinance institutions (MFIs), promulgated a law to discipline the micro-lenders that were indulging in coercive recovery practices. SKS’s operations in the state, which accounted for about a third of the total portfolio, had come to a grinding halt, forcing the company to look for other markets.
“Now, the impact of the Andhra Pradesh MFI Act is behind us. We are gearing up for growth and our strategy to turn around the operations has worked,” he said.
The company is currently operating in 19 states, excluding AP.
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