SKS Micro sees growth returning in Q4, profitable FY13

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SKS Micro sees growth returning in Q4, profitable FY13

Shares of SKS Microfinance, India's largest and only listed microfinance company, fell over 8% in opening trades after it posted a third consecutive quarter of loss.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about SKS Microfin See previous management interviews See what other Experts & Brokerages are saying about SKS Microfin SKS Microfin BSE | NSE 31/05/12 Are Mutual Funds betting on SKS Microfin?

Shares of SKS Microfinance , India's largest and only listed microfinance company, fell over 8% in opening trades after it posted a third consecutive quarter of loss.

SKS posted a loss of Rs 428 crore in December quarter, reflecting the sliding fortunes of the country's beleaguered microfinance sector. Its net revenues came in at Rs 81 crore versus Rs 363 crore a year ago.

Speaking to CNBC-TV18, PH Ravikumar, non-executive chairman (interim) of SKS said the company is taking steps to clear up the balance sheet. "We expect growth to return fourth quarter onwards," he said adding, "...will be profitable in fiscal year 2013."

Ravikumar said there has been 95-96% recovery in non AP portfolio. He said the Andhra Pradesh portfolio has been largely provided for.

"We will ensure that exposure is spread across the states," he added.

The company has made fresh disbursals of Rs 1,600 crore in the last six months. It is looking at four new verticals for growth including housing loans.

Meanwhile, Ravikumar expects the micro lender's qualified institutional placement (QIP) process to be completed by February-end. SKS Microfinance would raise Rs 500 crore through QIP route in the current fiscal. The company's board had given its approval for raising upto Rs 900 crore. 

"The QIP will alleviate funding stress," he said.

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: It's been another very disappointing quarter from SKS, particularly because of what's happened on the net loss side. What do you reckon the total operating loss and net loss might be for your company this year?

A: The provisions are in line with whatever policy we have adopted in the previous two quarters. We are clear that none of the sectoral participants have a timeline control on the macro level changes, particularly with the passage of the MFI Bill in the parliament. We are all hoping that it will get admitted into the parliament. It will be tabled in the parliament in the budget session.

We have proactively taken steps to cleanse the balance sheet. The AP portfolio is almost substantially provided for. Therefore, if you look at non-AP portfolio, which is where we are growing now, it is business as usual.

AP is a problem, not purely for us, but for the entire sector. But among the whole sectoral participants I would say we are the only ones probably where we have seen incremental lending buybacks.

Q: Just to get back to your loan disbursements. Last quarter AP was a problem, this quarter AP is a problem. But if you take that out, your loan disbursements are Rs 720 crore compared to Rs 900 crore last year. So, where is the growth happening?

A: This quarter the growth is better. We see the growth returning this quarter. The next two quarters, we would continue to see the growth. You are also aware that we are in the process of doing a QIP. We expect the QIP being completed by February-end. That will give us an additional boost.

Q: Do you have a sense of what kind of price you will be able to do the QIP at, given that it's a few weeks ago?

A: On that we have very little say because it's a SEBI driven formula. Therefore whatever is the market price, it would be at that price.