SKS Microfinance guides losses of more than Rs 30-50 crore Q1 FY13
SKS Microfinance has, for the first time, offered guidance on its earnings and projected losses of more than Rs 30-50 crore for the June quarter.
In a communique to stock exchanges, the company has also projected losses through the current fiscal. "Adverse financial performance of the company may continue for the rest of fiscal 2013."
Last fiscal, the battered lender to poor had incurred a loss of Rs 1,360 crore as against a profit of Rs 111.63 crore in the previous fiscal.
Following adverse financial conditions, SKS in May announced shutting down 78 out of 180 branches in its home state Andhra Pradesh and firing 1,200 out of 3,400 employees working in the Southern India state.
By March 2012, it had brought down the residual AP exposure to Rs 236 crore from a high of Rs 1,491 crore in October by writing off Rs 1,120 crore.
Following the adverse financial guidance, the SKS stock on Friday suffered a fall of 7.26% to close at Rs 84.30 on the Bombay Stock Exchange, the day the exchange's benchmark Sensex lost 18 points to close at 17,213 points.
The company said though its cash and bank balances had increased to Rs 689.98 crore by March end following the amount of loans assigned, it could not redeploy the funds quickly, which resulted in relatively lower outstanding loan portfolio.
"These and other factors resulted in our operational income being insufficient to meet the finance costs, personal expenses and operating expenditure," the company informed the exchanges.
On the new practice of guidance, a person close to the development said SKS had to offer guidance keeping in view the ongoing equity funds raising exercise where it expects to mop of around Rs 200 crore through preferential issue and a qualified institutional placement (QIP). "When you are in a capital raising mode, you will have to give indication on the numbers," he said.
However, the SKS senior management refused to offer comments, citing silent period.
"With the help of the fresh equity funds, the company plans to raise debt funds of around Rs 3,500 crore and ramp up its loan portfolio significantly over the next few quarters. The company hopes this to help it turnaround operations by third or fourth quarters of the fiscal," said the person quoted above.
The SKS board on Thursday approved a resolution to raise Rs 33.55 crore through preferential allotment of 44.5 lakh shares at a price of Rs 75.40 a share to Kumaon Investment Holdings, a wholly-owned subsidiary of WestBridge Venture. Similarly, it plans to go in for QIP issue to mobilise around Rs 165 crore.