SKS Microfinance reports Rs 70 cr loss in Q4

SKS,the country’s only listed micro finance company,had earned a net profit of Rs 63 crore during Q4,2009-10.

During Q4 2010-11,the company’s income from operations declined to Rs 170.93 crore from Rs 281.93 crore in the same period of the previous fiscal.

SKS said its credit cost rose to Rs 317 crore in FY’11 on account of provisioning,higher than Rs 51 crore in the previous fiscal.

“We could have merely followed provisioning norms as per RBI norms,which would have resulted in profit for Q4.

However,we took more stringent provisioning norms,” SKS Chief Financial Officer S Dilliraj said.

At the end of the fiscal,SKS net worth was Rs 1,781 crore with a cash and bank balance of Rs 558 crore.

During FY’11,the company disbursed loans worth Rs 7,831 crore,compared to Rs 7,618 crore in FY’10.

Following a spate of suicides in Andhra Pradesh on the allegations of high interest rates charged by micro finance companies and their strong-arm recovery tactics the state government enacted the Micro Finance Institutions (Regulation of Money Lending) Bill,2010,to regulate them.

“In spite of the provisioning,necessitated by the AP MF Act,the company’s financial foundations remain sound,” SKS said.

Andhra Pradesh accounts for 25 per cent of the MFI business. The industry is Rs 35,000 crore and MFIs lend around Rs 9,000 crore alone in the Southern state.

The company said it would open 50 branches in this April-June quarter,for lending against gold jewellery.

SKS Microfinance scrip nosedived by nearly 20 per cent to hit the lower circuit limit on BSE today amid reports that global financial services firm J P Morgan has cut its share price target by more than half.

In a sharp reaction to the report,SKS shares ended 19.83 per cent lower at Rs 331.30 on the Bombay Stock Exchange.