Its initial public offering drew euphoria and controversy in equal measure. But since its listing, SKS Microfinance has been under the spotlight for all the wrong reasons, be it the abrupt sacking of its former CEO or the run-in with the Andhra Pradesh government.
The company last week reported a net loss of around Rs 70 crore for the March quarter, and analysts are forecasting an even bigger loss for the current financial year. Vikram Akula, executive chairman, SKS Microfinance maintains there is nothing wrong with the business model of his firm, and that the problem is restricted to its operations in Andhra Pradesh. In an interview with CNBC-TV18, Akula said talks are on with the government to let to them restart disbursing loans in the region, which Akula believes, will aid a revival in repayment. "We have also announced today an attempt to diversify our portfolio to get into secured lending such as gold lending, lending to kirana (grocery) store owners that we work with and lending for mobile phones. This diversification also mitigates some of the difficulties that we are facing in Andhra Pradesh," Akula said. He is confident of a revival in repayment. He blamed external factors to have played spoilsport with the company earnings this quarter and said that they could have reported profits had the excess provisioning of Rs 187 crore not been made. Akula expects the return-on-investment for the company to go up from 3.6% to 4.5%. Below is the verbatim transcript. Watch the accompanying video too. Q1: You have already spoken about the challenges in your press conference, but I would like to ask you one question about FY12. The kind of outlook that we are getting from some of the analysts is quite grim. We have a Credit Suisse report which points that FY12 loss could be Rs 313 crore. Worse is, the JP Morgan report points out, that FY12 loss could be as high as Rs 750 crore. What is the picture as you see bidding out in FY12? A: I think, truly, the verdict is not out on that. If we are in a position in Andhra Pradesh where we can restart our lending process, we are confident that repayment will pick up. The problem has been that the restrictions who are giving you loans have been quite onerous and we havenDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
