SKS Microfinance, a publicly-listed Indian microfinance institution (MFI), recently reported a net loss of INR 2.18 billion (USD 48.1 million) for the quarter ending June 30, compared to a net profit of INR 669 million (USD 14.3 million) in the same period last year. Operating income fell 46 percent to INR 1.63 billion (USD 35.9 million), while total expenses increased by 114 percent to INR 2.96 billion (USD 65.1 million). Due in large part to defaults in the state of Andhra Pradesh, SKS experienced a 15-fold year-on-year increase in provisions and write-offs, from INR 119 million (USD 2.5 million) in the first quarter of 2010-11 to INR 1.83 billion (USD 41 million) in the same period of the fiscal year that will end in March 2012 [1].
In an effort to bolster its financial state and continue adding to its loan portfolio, SKS reportedly seeks to raise up to INR 9 billion (USD 202 million) through qualified institutional placements. SKS plans to generate new funds by offering commercial banks and private investment funds an opportunity to purchase new issues of common stock or securities convertible into equity shares [1].
As of March 31, 2011, SKS reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 952 million, a gross loan portfolio of USD 925 million, return on assets (ROA) of 2.4 percent, return on equity (ROE) of 7.93 percent and approximately 6.2 million borrowers.
By Rohan Trivedi, Research Associate
About SKS Microfinance:
SKS Microfinance is a microfinance institution (MFI) that was launched in 1998 and delivers microfinance products through a group-lending model to impoverished women in India. It is a for-profit, non-banking finance company that converted to a public limited company in May 2009 and launched an initial public offering on July 28, 2010. Equity investors include Quantum Hedge Fund, Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. As of March 31, 2011, SKS reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 952 million, a gross loan portfolio of USD 925 million, return on assets (ROA) of 2.4 percent, return on equity (ROE) of 7.93 percent and approximately 6.2 million borrowers.
Sources and Additional Resources:
[1] DNA India: “After biggest loss, SKS Microfinance plans to raise Rs900 crore via placement”, http://www.dnaindia.com/money/report_after-biggest-loss-sks-microfinance-plans-to-raise-rs900-crore-via-placement_1569792
MicroCapital.org story, June 14, 2011: “MICROCAPITAL BRIEF: SKS Microfinance Reconsidering Business Strategy to Rebuild Reputation”, https://www.microcapital.org/microcapital-brief-sks-microfinance-reconsidering-business-strategy-to-rebuild-reputation/
MicroCapital.org story, May 23, 2011: “MICROCAPITAL BRIEF: Supreme Court Schedules Hearing on Petition Filed by SKS Microfinance Against Over Regulation of Moneylending Act of India’s State of Andhra Pradesh”, https://www.microcapital.org/microcapital-brief-supreme-court-schedules-hearing-on-petition-files-by-sks-microfinance-against-over-regulation-of-moneylending-act-of-indias-state-of-andhra-pradesh/
MicroCapital.org story, May 8, 2011: “MICROCAPITAL BRIEF: SKS Microfinance of India Reports Q4 Net Loss of $15m, Cites ‘Stringent’ Loan Loss Provisioning”, https://www.microcapital.org/microcapital-brief-sks-microfinance-of-india-reports-q4-net-loss-of-15m-cites-stringent-loan-loss-provisioning/
MicroCapital.org story, March 14, 2011, “India’s Andhra Pradesh State to Tighten Local Microfinance Institutions (Regulation of Moneylending) Act”, https://www.microcapital.org/microcapital-brief-indias-andhra-pradesh-state-to-tighten-local-microfinance-institutions-regulation-of-moneylending-act/
MicroCapital Universe Profile: SKS Microfinance, http://microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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