After biggest loss, SKS Microfinance plans to raise Rs900 crore via placement

SKS Microfinance Ltd, the microfinance institution, is planning to raise up to Rs900 crore through a qualified institutional placement (QIP) of equity shares.

The company has been evaluating various means of raising capital primarily to meet its growing need for funds.

Meanwhile, the company has, as expected, incurred a loss — of about Rs218.74 crore for the quarter ended June. This is the highest loss SKS has booked in a quarter.

For the quarter ended March, the loss stood at Rs70 crore.

“In the absence of virtual certainty of future, taxable profits supported by convincing evidence, the net deferred tax asset amounting to Rs94.76 crore as at June 30 has not been recognised, in accordance with the requirements of Accounting Standard 22... This will be available to offset taxes on future taxable income,” SKS said.

For the quarter ended June 2011, income from operations stood at Rs149.85 crore, while the other operating income was Rs13.70 crore.

Provisions and write-offs increased to Rs183.66 crore as against Rs119.58 crore in the corresponding period of the previous year.
SKS has been facing major issues in Andhra Pradesh, which contributes about 25% of its portfolio.

Specifically, for the Andhra market, the company has made a reassessment of its portfolio. According to the asset classification, the loss assets with overdue of over 720 days has been provided fully (100%) while the standard asset of arrears of less than 180 days has a provision of about 0.25%. The sub-standard asset with overdue for 180-720 days has 10% provisioning.